Calgary's Economic Tightrope: Navigating Trade Wars, Rate Cuts, and the Future of Energy
Calgary's Economic Rollercoaster of 2025
As 2025 draws to a close, Canada's economic narrative has dramatically shifted from a relentless battle against inflation to a high-stakes wrestling match with trade wars and deep-seated structural challenges. Here in Calgary, we felt every tremor. The Bank of Canada, having delivered a cumulative one percentage point cut this year, settled its policy rate at 2.25% by December 2025, signaling a pivot towards economic stimulation after earlier substantial cuts in 2024. Simultaneously, a new federal government under Prime Minister Mark Carney unveiled ambitious goals for Canada's energy sector and trade diversification, most notably through a landmark Memorandum of Understanding (MOU) with Alberta. Despite a global landscape thick with trade turmoil, Alberta's economy demonstrated surprising resilience, bolstered by internal factors and a breakthrough in interprovincial trade agreements. The measured level of economic policy uncertainty in Canada reached an all-time high in March 2025, reflecting widespread anxiety over potential tariff impacts.
What This Means for Your Wallet & Your City
These national and provincial economic currents carry direct and significant implications for every Calgarian. The Bank of Canada's policy rate cuts throughout 2025, reaching 2.25% by year-end, offer some relief on borrowing costs, potentially easing the burden of mortgages and other loans for homeowners and businesses across the city. This is a welcome reprieve after a period of intense interest rate hikes.
For Calgary's core industry, the federal-provincial energy MOU is a pivotal development. Signed on November 27, 2025, it promises a path to bolster investment and expand energy exports to Asian markets through new pipeline capacity, aligning with the federal goal to double non-U.S. exports over the next decade. This could translate directly into job stability and growth within Calgary's energy sector, benefiting our highly skilled workforce and corporate ecosystem. Keep an eye on April 1, 2026, for an agreement on the industrial carbon price and the Pathways carbon capture project, and July 1, 2026, for the West Coast pipeline submission to the Major Projects Office – these dates are crucial for the MOU's execution.
Alberta's faster population growth, driven by interprovincial migration, continues to support Calgary's consumer spending and housing market. While this fuels local businesses and keeps our city vibrant, it also puts ongoing pressure on housing affordability and city infrastructure, demanding careful planning from City Hall. On the trade front, Alberta benefited more than other provinces from CUSMA exemptions, contributing to our economic resilience. The breakthrough Mutual Recognition Agreement on internal trade, signed in November 2025, means that if a good can be sold in one province, it can generally be sold in another without additional requirements. While services and some specific goods like food and alcoholic beverages are excluded, this move could, over time, lead to reduced costs for many everyday items by dismantling longstanding interprovincial trade barriers, making your grocery bill a little less painful.
Our agricultural sector also showed remarkable resilience. Despite new tariffs from China and India, 2025 saw bumper crops for Alberta's wheat, canola, and barley. Alberta's wheat production hit an all-time record at 12.3 million metric tonnes, and canola yields tied 2016 for an all-time high. However, our canola producers faced significant tariffs from China (76% on seed, 100% on oil and cake), though increased Canadian processing capacity offers some offset. For those firing up their backyard barbecues, beef prices smashed records, with fresh and frozen beef inflation running at 19% year-over-year in November, largely due to reduced supply after years of drought.
The Flip Side: Not Everyone's Cheering
While the energy MOU signals a renewed focus on Alberta's energy sector, it has drawn sharp criticism from environmental groups such as Ecojustice and the David Suzuki Foundation. They argue the agreement risks undermining federal climate policies by potentially weakening emissions caps, exempting Alberta from Clean Electricity Regulations, and delaying methane reduction targets. Concerns have also been raised regarding the use of carbon capture and storage (CCS) for enhanced oil recovery rather than solely for emissions reduction.
Furthermore, British Columbia Premier David Eby publicly criticized the energy MOU, expressing concern over his province's exclusion from negotiations, particularly given the direct impact a new West Coast pipeline would have on B.C.'s environmental protection and provincial jurisdiction. He called the MOU a "distraction" and an "energy vampire" that could drain resources from more viable projects. Adding to the dissent, Steven Guilbeault, the former federal environment minister, resigned from Prime Minister Carney's cabinet in protest of the MOU, further highlighting the deep divisions this agreement has created.
Regarding the breakthrough in internal trade, while widely welcomed, critics point out that significant exclusions remain, notably services, food, alcoholic beverages, cannabis, tobacco, and live animals. These limitations, while understandable given provincial regulatory complexities, cap the comprehensive economic benefits for both consumers and businesses that a truly unfettered internal market could provide.
The Bottom Line: Looking Ahead to 2026
The economic narrative of 2025 for Calgary and Alberta is one of adaptation and strategic recalibration in the face of global uncertainty. While the year brought some relief in interest rates and a promising federal-provincial alignment on energy and trade, the underlying tensions between economic growth, climate action, and interprovincial cooperation remain prominent. The resilience shown by Alberta's labor market, with employment expanding an estimated 2.9% and an unemployment rate averaging 7.2%, demonstrates our province's ability to weather storms. As Calgary navigates its path towards a diversified yet robust economy, the ongoing execution of these blueprints in 2026 will critically determine their true long-term impact. How effectively can these new agreements foster prosperity while addressing valid concerns about environmental stewardship and equitable economic benefits across the country? The question for Calgarians now isn't just about what happened, but what we'll build next on this dynamic economic landscape.
