Canada heads into the final days of September with economic policy, provincial finances and international instability converging in ways that will be felt well beyond the headlines. Here are the developments worth watching.
Canada’s trade war is becoming a growth problem, not just a tariff problem
The economic consequences of the Canada-U.S. trade fight are increasingly moving beyond the industries directly hit by tariffs. Bank of Canada Governor Tiff Macklem warned last week that new U.S. tariffs could push fourth-quarter Canadian growth below one per cent, compared with an earlier projection of 1.5 per cent. The concern is not simply that exporters pay more to reach the U.S. market. Persistent uncertainty can cause companies to postpone investment, hiring and expansion even when their own products are not directly tariffed.
That helps explain Ottawa’s push to accelerate major infrastructure and resource projects. Federal legislation introduced September 21 proposes a one-year target for federal reviews and would run some permitting processes simultaneously rather than sequentially. The government argues Canada needs to become faster at building domestic economic capacity as its relationship with its largest trading partner becomes less predictable.
The larger shift is important. Canada’s response to U.S. protectionism is gradually becoming an argument about economic structure: how quickly the country can approve projects, diversify markets and reduce vulnerabilities created by decades of deep continental integration.
Reuters: Bank of Canada on tariffs and growth | Reuters: Canada’s proposed project-review changes
Ontario’s $13-billion deficit raises a harder question about public services
Ontario’s newly released audited Public Accounts show the province ended 2025-26 with a $13-billion deficit. That was $1.6 billion better than projected in the 2025 Budget, helped by stronger-than-expected revenues and income from government business enterprises.
The headline deficit, however, tells only part of the story. Ontario spent $220.9 billion across government programs, up $10 billion from the previous fiscal year. At the same time, Ottawa has spent much of 2026 confronting visible pressure inside its health system, including announced job reductions at The Ottawa Hospital and Bruyère Health.
Those two facts are not inherently contradictory: provincial spending can rise overall while individual institutions remain under severe budget pressure. But that is precisely why the Public Accounts matter. The useful debate is not simply whether Ontario is “spending more” or “cutting.” It is whether funding growth is keeping pace with population needs, wages, inflation, aging infrastructure and the increasing complexity of health care. For Ottawa residents watching hospital staffing shrink, aggregate provincial spending numbers do not by themselves answer that question.
Ontario: 2025-26 Public Accounts release | Ontario: audited consolidated financial statements
Iran’s Hormuz proposal shows how much of the conflict now revolves around economic leverage
Iran said Sunday that diplomacy remains the only way out of its conflict with the United States and Israel after U.S. President Donald Trump said he had rejected Tehran’s proposal to reopen the Strait of Hormuz and halt regional fighting.
Iran presented the proposal during the UN General Assembly and said it had been transmitted through Qatari mediators. Iranian Foreign Minister Abbas Araqchi said an agreement could begin a seven-day process toward reopening the strait and pausing fighting. Trump publicly rejected the proposal Saturday, although Araqchi said mediators had not yet formally conveyed a definitive U.S. rejection to Tehran.
The importance of Hormuz extends far beyond the combatants. The seven-month conflict has disrupted shipping through one of the world’s most important oil routes, making access to the waterway itself a bargaining instrument. That connects diplomacy directly to fuel prices, inflation and economic growth in countries nowhere near the Middle East, including Canada. The negotiations are therefore not merely about ending military exchanges. They are also about who can impose the greater economic cost while those exchanges continue.
Reuters: Iran insists on diplomacy after Trump rejects proposal
Ukraine’s air war is increasingly an infrastructure war
Russian drones struck Kyiv again on September 26, hitting an apartment building and a supermarket, according to Reuters reporting from the scene. The attack follows a week in which both Russia and Ukraine have continued targeting infrastructure and energy-related assets.
The strategic significance goes beyond individual strikes. Ukraine has targeted Russian refineries and other economic infrastructure, while Ukrainians are preparing for the possibility of renewed Russian attacks on heating and power systems as winter approaches. Attempts to establish an energy ceasefire have so far failed to produce a durable pause.
This changes the economics of the war. Refineries, electrical systems, ports, warehouses and transportation networks are not simply supporting infrastructure. Damaging them can constrain military operations while simultaneously imposing costs on civilians, government budgets and export revenues. As the war continues, economic resilience is becoming inseparable from battlefield resilience.
Reuters: September 26 Russian drone strike in Kyiv | Reuters: efforts toward an energy truce
AI is moving from a technology debate into the international-security system
The United Nations Security Council’s discussion of artificial intelligence this week is another sign that governments are beginning to treat advanced AI as more than an economic or technology-policy issue. Reuters reported that China’s DeepSeek was invited to brief the council alongside representatives from major Western AI companies as governments debate the security implications of increasingly capable systems.
The significance is institutional. The Security Council exists to deal with threats to international peace and security. Putting AI inside that forum moves questions about autonomous systems, military applications and loss of human control closer to the same diplomatic machinery used for nuclear proliferation, armed conflict and other cross-border risks.
There is also a geopolitical divide. Washington and Beijing both want influence over global AI rules while competing for technological advantage. That creates an obvious tension: the countries with the greatest capacity to slow, regulate or constrain advanced systems are also the countries with the strongest strategic incentives not to fall behind. International AI governance will have to function inside that contradiction.
Reuters: DeepSeek and the UN Security Council AI discussion
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