Good morning. Canada\u2019s economy remains under strain, but new signs suggest the country is weathering the storms of war and trade tensions better than some had feared. That\u2019s in focus today \u2013 along with a look at how drug deaths in Canada and the United States are declining overall, but unevenly at the local level.<\/p>\n
Up firstIn the news<\/p>\n
Energy: Negotiations between Alberta and Ottawa that could pave the way for a new oil pipeline have been stymied by disagreements over carbon pricing<\/a> and a CO2-capture project in the oil sands.<\/p>\n Manufacturing: Airbus SE is set to unveil one of its biggest-ever orders for its Canadian-made A220 airliner<\/a>, a multibillion-dollar sale that further cements Quebec as one of the key global hubs for commercial aircraft production.<\/p>\n Telecoms: Telus is using AI technology that alters the accent of customer-service agents<\/a>.<\/p>\n Open this photo in gallery:<\/a><\/p>\n Shipping containers in the Port of Montreal.Christopher Katsarov\/The Canadian Press<\/p>\n In focusHow Canada is staying afloat<\/p>\n While yesterday\u2019s Statistics Canada report<\/a> didn\u2019t exactly set hearts aflutter \u2013 at least, mine didn\u2019t noticeably flit, but that could be because I\u2019m trying to drink less coffee \u2013 it did point to how the country is coping with slow growth and pressures from the Iran war. There are downsides almost everywhere you look, but also signs that the country, at least through a wide-angled lens, is more resilient than expected.<\/p>\n Trade: Canada\u2019s merchandise trade balance swung to a surplus of $1.8-billion in March compared with a deficit of $5.1-billion in February. <\/p>\n That surplus was driven by higher oil prices and a burst of gold exports \u2013 not exactly the kind of foundation an economy can count on for sustained growth. Strip those out, and exports fell at a 2.4-per-cent annualized pace in the first quarter.<\/p>\n Tariff\u2011exposed exports continue to struggle: Steel was down about 50 per cent from a year earlier; lumber about 22 per cent.<\/p>\n But motor vehicle exports continued a steady drive up from earlier production disruptions, and overall export volumes were higher year-over-year for the first time since last March.<\/p>\n Energy: Higher oil prices have been a clear financial boon for Canada\u2019s energy sector. Crude oil exports jumped nearly 19 per cent in March from February, when oil prices surged following the U.S.-Israeli attack on Iran.<\/p>\n The price shock is funnelling significantly more revenue into Canada\u2019s oil-producing regions, quickly boosting export values even without a corresponding rise in volumes.<\/p>\n That\u2019s why the head of the International Energy Agency is calling on Canada<\/a> to accelerate energy infrastructure projects. Fatih Birol is in Ottawa this week to meet with federal cabinet ministers about the energy crisis, which is hobbling global markets. Given the high price of oil, the country has a \u201conce-in-a-generation opportunity\u201d to become a major exporting player, he said.<\/p>\n But talking about major infrastructure in Canada is a whole lot harder than building major infrastructure in Canada. As Emma Graney and Stephanie Levitz report<\/a>, early negotiations between Alberta and Ottawa on making way for a new oil pipeline are already mired in muskeg.<\/p>\n Earnings: Investor behaviour suggests markets don\u2019t believe wider geopolitical shocks will weigh on the earnings of Canada\u2019s major oil producers, which account for roughly 15 per cent of the S&P\/TSX Composite. The index gained nearly 8 per cent in the first five months of the year after rising almost 32 per cent in 2025. <\/p>\n At least for now. As this (\u2191) chart shows, that confidence wobbled in mid\u2011March when signs emerged that the Iran conflict might cool, pulling down oil and gold prices \u2013 and with them, a Canadian market that had been buoyed by both.<\/p>\n Consumers: As anyone who eats food or uses fuel knows, higher oil prices come with a downside. Even after Prime Minister Mark Carney suspended the federal government\u2019s tax on gas, prices at the pump are well above their prewar prices.<\/p>\n While high fuel prices sting, Rob Carrick writes<\/a>, they could fall if a resolution is reached in the Iran war. The larger issue is food. \u201cThere\u2019s nil chance of food prices declining from current levels in a broad and noticeable way.\u201d<\/p>\n Food inflation is above the rate of wage increases, and food is what matters to most Canadians, Carrick told me. Wage increases have tracked above inflation \u2013 but that\u2019s only on average, \u201cwhich means plenty of people are getting nothing or close to it while others are doing well.\u201d<\/p>\n Canadian economy: Higher imports from earlier in the year could weigh heavily on economic growth in the first quarter, economists at RBC wrote in a note to clients yesterday. But it\u2019s a drag on paper that hints at strength: Gains in industrial equipment imports point to sustained business investment. That hasn\u2019t exactly been a strong point for Canada in recent years, and represents one of Carney\u2019s biggest challenges<\/a>.<\/p>\n (Relatively) comforting thoughts: A combination of higher energy revenues, the lagging effects of earlier interest-rate cuts and increased government spending will support further improvement in Canadians\u2019 standard of living in the year ahead, the economists wrote.<\/p>\n There\u2019s still the matter of trade negotiations with the U.S. But there\u2019s room for mild optimism there, too, according to David Doyle, head of economics at Macquarie Group. In a market strategy note last night, he outlined an expectation that the United States Mexico Canada free-trade agreement \u201cwill continue in force,\u201d although a finalized deal to renew it, including any changes, does not appear likely before July.<\/p>\n ChartedOutlier on the Prairies<\/p>\n Drug deaths have been steadily declining in Canada and the United States over the past two years, sparking hushed optimism from government leaders and addictions experts that the drug-poisoning crisis has finally turned a corner. But national figures obscure a more complicated picture<\/a> at the local level.<\/p>\n Quoted<\/p>\n Canada is a wonderful country, shaped by its diversity of people of perspectives and experiences, but I think shaped also mostly by a common respect for strong public institutions and for the rule of law.<\/p>\n – Louise Arbour, after being named Canada\u2019s next governor-general.<\/a><\/p>\n Up nextMore files we\u2019re following<\/p>\n Today: Walt Disney Co. earnings will have investors looking to see whether the war in Iran has hit international travel to its theme parks.<\/p>\n Tomorrow: McDonald\u2019s Corp. stock has been under pressure since the beginning of the Iran war, which has added supply chain pressures and raised concerns about sales in the Middle East.<\/p>\n