Canada’s Corporations Churning Out Profits Despite Tariff Hit

(Bloomberg) — Canada’s companies continue to grow profits even as the economy struggles with tariff damage.

Operating profit rose 3.8% to C$200 billion ($142 billion) in the third quarter, according to data released Monday by Statistics Canada. This is the fastest pace of growth in two years and follows a seasonally adjusted contraction of 2.4% in the second quarter.

The agency stated that earnings before interest and taxes in the financial sector increased by 6% to C$96 billion, driven by lower provisions for loan losses and increased non-interest income in banking.

Non-financial sectors also increased operating profits by 1.9% between July and September, with increases in 25 of 39 subcategories. Profits rose in 10 of 14 of the nation’s manufacturing industries.

The data shows companies in Canada are generally doing well despite ongoing pressures from U.S. trade policy and a high unemployment rate.

Major tariffs on steel, aluminium, auto and timber products remain in effect, and the central bank expects lackluster economic growth in the second half of 2025 as business investment and exports decline.

At the same time, most Canadian exports to the United States are exempt from duty provided they are covered by a free trade agreement between the United States, Canada and Mexico, leaving the country with a relatively low effective tariff rate.

“Tariffs are a brutal but narrow hit,” said Fred Demers, chief strategist for multi-asset solutions at BMO Global Asset Management.

“Firms are defending strong profit margins and investors should remain comfortable,” he said.

–With help from Mario Baker Ramirez.

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