Iran War – Key Strategies

Key Strategies to Support Canadian Industries Amid Global Challenges

The conflict in Iran, particularly the closure of the Strait of Hormuz, is significantly impacting Canadian industries, the economy, and agricultural output. ​ Here’s how the Bank of Canada and the Canadian government are addressing these challenges:

Impact on the Economy ​

Economic Growth: Deloitte Canada has reduced its GDP growth projection for 2026 from 1.5% to 1.2%, citing uncertainty caused by the Iran war and its impact on global oil prices.

Energy Prices: The closure of the Strait of Hormuz has led to a global oil supply shortage, driving up oil prices to over $110 per barrel. Gas prices in Canada have risen to over $2 per litre in some provinces, affecting consumers and businesses. ​

Inflation and Supply Chain Costs: Higher energy prices are increasing supply chain costs, which could restrain business investment and consumer spending. ​ This is expected to result in slower economic growth in the first half of 2026. ​

Impact on Agriculture ​

Fertilizer Prices: The conflict has caused a spike in fertilizer prices, particularly nitrogen and phosphate fertilizers, as key inputs like urea and sulfur are heavily reliant on the Strait of Hormuz for global trade. ​ This is creating challenges for Canadian farmers, especially during the spring planting season. ​

Ripple Effects: Rising input costs, combined with sagging commodity prices, are putting pressure on farmers’ margins, potentially affecting food supply and agricultural output. ​

Bank of Canada’s Approach ​

The Bank of Canada is expected to hold its key policy rate at 2.25% throughout 2026 to provide stability amid economic uncertainty. ​ This decision aims to mitigate the impact of rising energy prices and support economic recovery. ​

Canadian Government’s Actions ​

Diplomatic Efforts: Canada is participating in U.K.-led talks with over 30 nations to find a diplomatic resolution to reopen the Strait of Hormuz. ​ Foreign Affairs Minister Anita Anand has emphasized the importance of a ceasefire before Canada commits to further action. ​

Military Involvement: While Canada has expressed support for reopening the strait, Prime Minister Mark Carney has stated that Canada will not participate in combat operations. However, Canada may consider sending naval assets to assist in ensuring freedom of navigation in the region. ​

Support for Industries and Citizens: The government is focusing on infrastructure spending and targeted tariff relief to support economic growth. ​ Efforts to stabilize the housing market and promote business investment are also underway. ​ Additionally, Canada is exploring ways to diversify trade away from the U.S. to reduce economic vulnerability. ​

Public Sentiment

A recent poll revealed that 84% of Canadians are concerned about the conflict spreading into a wider Middle East war, and 80% are worried about Canadian military involvement. ​ However, over 70% of respondents are open to Canada playing a role in the conflict, primarily through diplomatic efforts and humanitarian aid. ​

In summary, the Canadian government and the Bank of Canada are taking steps to manage the economic fallout from the conflict in Iran, including stabilizing interest rates, supporting industries, and engaging in diplomatic efforts to reopen the Strait of Hormuz. However, Canada’s military involvement is likely to be limited to non-combat roles and naval support.

Ways GTA Strategies will assist:

Policy Advocacy: GTA Strategies will work with the government to advocate for policies that support industries affected by the Iran conflict, such as subsidies for farmers facing rising fertilizer costs or construction companies dealing with elevated material prices.

Trade Diversification: GTA Strategies will assist industries in identifying alternative markets and trade routes to reduce reliance on regions affected by geopolitical instability. ​

Infrastructure Development: For the construction sector, GTA Strategies is assisting in identifying opportunities for government-funded projects and providing guidance on navigating regulatory challenges. ​

Risk Management: We are ready to offer strategies to mitigate risks associated with geopolitical uncertainties, such as supply chain disruptions and price volatility. ​

Contact us today to learn more about how we can support your business in this dynamic environment at info@gtastrategies.com or by phone at (888) 241 9948 ext 1.