Protectionism and geopolitics lead EDC’s Top 10 global risks for 2026

As we look ahead to another year, the team at EDC Economics has compiled our Top 10 global risks list for 2026. And what a start it’s been! Just days into the new year, we witnessed a major geopolitical event—the United States launched a special operation to exfiltrate Venezuelan President Nicolás Maduro, upending regional dynamics and sending shockwaves worldwide.

Against this backdrop of heightened uncertainty, here are the Top 10 risks that could shape global trade and impact Canadian exporters in 2026.

1. Canada recession risk

After contracting in the second quarter of 2025, Canada narrowly avoided a technical recession thanks to a collapse in imports and additional government spending. Looking ahead, any increase in tariffs would further impair Canada’s export performance. High household debt also risks triggering a slowdown in consumer spending.

2. Global trade war

Although some trade deals were signed in late 2025, there’s a real risk that trade tensions reignite. Escalating tariffs and rising uncertainty could pressure inflation, depress economic growth and strain supply chains as importers rush to build inventories.

3. CUSMA discord

Renewal of the Canada-United States-Mexico Agreement (CUSMA) is critical for business continuity. Changes to rules of origin, tariff rates and sensitive sectors pose a risk to businesses across North America. A weakening of the accord would threaten trade stability and negatively impact Canadian exporters.

4. Global recession risk

Protectionism and eroding international norms threaten co-operation, raising the risk of a global downturn. A synchronized slowdown would weaken labour markets, tighten credit and increase defaults—creating systemic stress for companies.

5. China-Taiwan escalation

The South China Sea is vital for global trade, energy transport and supply chains, with trillions of dollars in goods and a significant portion of global maritime traffic passing through annually. Taiwan’s role as a semiconductor hub makes any deterioration in security a severe risk for Canadian exporters reliant on high-tech inputs and shipping lanes.

6. Globalization slowdown

Trade and geopolitical tensions are reshaping globalization. A more fragmented, regionalized system incentivizes resilience over efficiency, leading to suboptimal trade and investment decisions and eroding long-term prosperity.

7. U.S. recession risk

Despite resilience, the United States faces risks from inflationary pressures, labour market deterioration, declining business investment and financial market volatility. A U.S. recession would almost certainly spill over into the Canadian economy.

8. Erosion of global institutions

Institutions like the World Trade Organization (WTO) and World Bank are under pressure. For Canadian exporters, weakened global governance means increased trade uncertainty and systemic risk, raising the cost of doing business.

9. Geopolitical risk

As recent events in Venezuela, Iran and Greenland highlight, geopolitical risk is elevated globally. This risk isn’t confined to one country or region but reflects a broader trend of increased conflict and instability. These tensions can force companies to reorient supply routes and target markets, driving up logistical costs and creating uncertainty for exporters.

10. Climate reprioritization

Policy changes and capital constraints risk squeezing investment in clean technologies. Reduced funding for mitigation and adaptation technologies could have long-term repercussions for the global economy.

The bottom line: How Canadian exporters can navigate rising global risks

The global environment is increasingly challenging for Canadian exporters. Navigating major shocks like protectionism and geopolitical risk requires both resolve and agility. The best way forward? Understand the risks ahead and adopt strategies to mitigate them.

Plan with confidence. Explore EDC’s Global Economic Outlook for expert forecasts and our Country Risk Quarterly for country-by-country insights.

This week, a very special thanks to Ian Tobman, manager of our Country Sector Intelligence team.

As always, at EDC Economics, we value your feedback. If you have ideas for topics that you’d like us to explore, please email us at economics@edc.ca and we’ll do our best to cover them.