Canadian business profits soar despite trade turbulence

Canadian corporations reported operating profit of $200 billion in the third quarter of 2025, marking growth of 3.8% from the previous quarter as financial sectors outpaced industrial segments dealing with tariff pressures and labour disruptions.

The financial industries drove the expansion, posting a 6% increase to $95.5 billion in operating profit.

Banking particularly surged, climbing $2.7 billion or 10.1% as lower provisions for credit losses offset tighter lending conditions.

Non-financial industries, meanwhile, grew more modestly at 1.9% to $104.5 billion.

Manufacturing stabilizes amid production adjustments

Manufacturing rebounded with a 6.6% increase in operating profit, led by the motor vehicle sector, which added $1.1 billion in profit despite temporary production shutdowns tied to weak electric vehicle demand.

Mining benefited from record gold prices, posting a 24.8% quarterly gain.

The momentum masked deepening cracks elsewhere. Construction contracted 4.4% as tariff pressures and supply-chain uncertainties compressed margins.

Transportation and postal services fell 5.9%, largely due to aviation labour disruptions that rippled through the sector.

Broader economic resilience tested

Robust banking profits suggest continued lending capacity, while construction weakness signals potential softness in real estate development pipelines.

The tariff-driven challenges facing non-financial sectors may eventually pressure corporate borrowing demand and credit quality.

Financial services' outperformance masks an economy increasingly divided between sheltered sectors and those bearing the brunt of trade friction.

As tariff uncertainties persist, the question for lenders becomes whether Q3's gains prove sustainable or represent a temporary reprieve before structural headwinds intensify.

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