Canadians woke up to rather troubling economic news late this week, with Statistics Canada announcing a larger-than-expected slowdown for the second quarter of 2025. Overall, Canada’s GDP declined 1.6 percent on an annualized basis, largely due to American tariffs squeezing exports.
And so Canada goes, so goes its largest province. The outlook is bleak: Ontario’s economy is in trouble.
While Donald Trump’s tariffs pose a clear and present danger to key sectors in the province, such as autos—StatsCan reported a whopping 24.7 percent decline in international exports of passenger cars and light trucks in Q2 owing to U.S.-imposed tariffs—and steel, the reality is that Ontario’s economy has been stuck in neutral for many years owing to high taxes, overregulation, excessive immigration, and a malfunctioning higher education system.
Decisive action will be required to get Ontario’s economy back on the right track: what is needed is not more government subsidies to favoured sectors, but rather bold reforms that will give the private sector the means and motive to do what it does best: create prosperity.
Ontario’s dismal economic record
Most Canadians are aware of their country’s poor economic performance over the last few years. However, it is perhaps less well appreciated that Ontario—long the economic powerhouse of Confederation—is making a disproportionate contribution to this decline, with living standards and productivity growth that are slipping behind the rest of Canada.
