Canada at a Crossroads
Given the current dynamics of the geopolitical environment, it is certain that Canada’s trading relationships and economic structure will be fundamentally changed for the foreseeable future.
The uncertainty will be the magnitude and speed of adjustment to this new reality.
Events are unfolding rapidly, and a growing global consensus suggests that the post-war economic order is undergoing a fundamental, potentially permanent, shift.
However, this transformation did not begin with the lead-up to the U.S. administration’s “Liberation Day” on April 2, 2025 — trade tensions, global competition for economic power and sovereign debt pressures have been escalating since the 2008 recession.
In 2024, Canada’s two-way trade with the United States totalled approximately $1 trillion. The U.S. accounted for 76% of Canada’s total goods exports and more than half of its services exports.
This heavy reliance underscores Canada’s economic exposure — a 25% drop in exports to the U.S. would translate to a significant $175 billion, or nearly 10%, contraction in the Canadian economy. More realistically, the Bank of Canada expects a 25% U.S. tariff on all Canadian goods to result in a three to four per cent decline in GDP.
Importance of Canada’s Capital Markets
While it is impossible to predict the scope and magnitude of American trade volumes, a reduction in some form will occur and it will have a significant impact on the real economy.
The capital markets sector will be central to Canada’s public and private economic policy response to American trade challenges and the broader global economic trends discussed above. Capital investment from all levels of government, as well as private sector domestic and global sources, will be necessary if we hope to mitigate the damage.
Capital markets talent and expertise will be essential to reshape the balance of our international trading relationship and necessary structural economic reforms. In this report, we will discuss the impact of change and the talent implications for key capital markets sectors, drawing on market observations and industry research.
As private markets evolve amid global uncertainty and shifting trade dynamics, Canada must remain competitive by investing in specialized leadership across capital markets. Talent decisions today will shape the financial resilience of tomorrow.
In my work within the financial services sector, I have seen how strategic executive recruitments — like those led by Massey Henry — can be a catalyst for long-term performance and institutional strength, especially during this unprecedented time.
Want to learn more about the key executive talent trends shaping Canada’s capital markets sector? Read our latest report.
Key Economic and Capital Market Trends in Canada
Pace of Investment Activity
After years of record-low interest rates that fueled corporate expansion, investment activity in Canada had slowed due to higher borrowing costs in the post-pandemic era.
With the rise of trade tensions and global economic volatility, the Bank of Canada has lowered rates and has signaled further rate cuts in 2025.
Interest Rate Reductions
Canada will face continued pressure to reduce rates to assist consumers and to stimulate corporate investments. Lower interest rates, combined with potential economic policy and regulatory support initiatives, will be an important driver of investment activity.
Private & Public/Private Investment
Deal-making activity remains tepid, as financing is still expensive and investors hesitate amid uncertainty. However, early policy statements from new Prime Minister Mark Carney — at the time of writing — suggest Canada may increase support for direct investment in struggling economic sectors, along with the potential for more public-private investment.
Mergers & Acquisitions
Canada experienced a robust M&A transaction pipeline during the pandemic period but inflationary pressures post-pandemic reduced activity considerably. We anticipate a revival in M&A activity in response to companies seeking larger footprints, and believe that they will leverage buying and borrowing power to build fortress capital and to cope with heightened trade barriers and increased global competition.
Equity Sales & Trading Pressures
We also expect an increase in investors’ cash holdings as they exit volatile positions. Equity sales, trading, and research teams are likely to experience commission-driven declines as investors increasingly sit on the sidelines.
Hiring Impact
Demand for investment banking professionals who specialize in distressed assets, restructuring, and complex financing structures is expected to rise, with decreased demand for investment banking professionals in other sectors.
Corporate development executives who can identify and execute strategic growth initiatives despite market volatility will be highly valued.
M&A professionals who have experience in resources, including energy, and mid-sized financial services will be sought after.
The Rise of Private Credit in Canada
With traditional lending conditions tightening and banks facing stricter regulations, private credit is emerging as a key alternative financing source.
Unlike in the U.S., where the private credit market is well-established, Canada is experiencing a late-stage boom in this space.
Institutional investors, pension funds, and asset managers are expanding their private credit platforms to capitalize on the demand from mid-market companies struggling to secure bank financing.
- Credit Issuance Resilience: While traditional credit markets slow down, there is uninvested capital in private credit that could support sustained hiring.
- Regulatory Complexity: The expansion of private credit will require firms to navigate evolving compliance landscapes.
Hiring Impact
Demand for private credit leaders with expertise in direct lending, structured credit, and distressed debt is rising.
Risk and compliance executives with alternative lending expertise will be critical.
AI and Technology Disrupting Financial Services
Canada’s financial institutions and asset managers are actively investing in AI-driven efficiencies, but challenges remain in adoption, governance, and regulatory compliance.
While the U.S. has seen more aggressive AI-related capital investment, Canada remains cautious, particularly given its stringent regulatory oversight.
- Demand for AI-driven trading and investment platforms is increasing.
- Regulatory concerns around AI-driven decision-making are leading to greater oversight in financial institutions.
Hiring Impact
Financial technology and AI investment leaders who understand the intersection of finance, technology, and AI implementation will continue to be highly sought after.
Regulatory and risk executives with expertise in AI governance, cybersecurity, and IT risk will be in strong demand.
U.S.-Canada Trade Dynamic and Canada Response
Canada’s trade outlook remains uncertain due to substantial pressure to revise the MCUSA agreement, as well as sector-specific and reciprocal tariffs. Regulatory and policy shifts in both Canada and the U.S. will continue to shape capital markets hiring needs.
- Cross-border financial deals may face increased scrutiny.
- The “Buy Canada” movement is likely to reduce reliance on U.S. service providers.
- Canadian financial institutions operating in the U.S. may face new industry-specific tariffs or operational and regulatory requirements.
- Conversely, U.S. financial institutions operating in Canada could see similar restrictions imposed, creating staffing level impacts for U.S.-headquartered Schedule II and III financial institutions.
Hiring Impact
Trade finance and corporate treasury executives with expertise in currency risk management and cross-border financing will be essential.
Government relations and policy experts within capital markets firms will play a crucial role in navigating trade policy shifts and regulatory uncertainty.
Economists and Investment Strategists with data-driven approaches will be increasingly relied upon for direction and forecasts.
Capital Market Sector Impacts
Most resilient sectors:
Risk & Compliance
These remain essential functions across financial services – and will only grow in proportion to uncertainty.
Private Equity
Historical data shows that PE firms are more resilient and recover faster from downturns than public-market securities.
Distressed Funds & Hedge Funds
These firms capitalize on economic fallout and are expected to thrive.
Restructuring & Distressed Advisory
Investment banks with strong restructuring practices and consulting firms will benefit.
Sectors facing hiring pressures
Investment Banking (excluding restructuring), due to lower corporate spending.
Equity Sales & Trading, as market volatility reduces investor confidence and associated transaction volumes.
Equity research faces a revenue decline as investor activity slows.
We have observed — particularly during the COVID era — that periods of market turmoil tend to drive increased demand for wealth management services. Notably, there was a significant uptick in activity directed toward investment advisors, as individual investors sought additional guidance during turbulent markets. As the current volatility continues, we anticipate sustained demand for professionals in this space.
Looking Ahead
As geopolitical and economic uncertainty persist, capital markets hiring in Canada will focus on strategic adaptation with sector-specific (rather than broad-based) expansion.
Firms will prioritize specialized executive talent capable of navigating volatility, regulatory requirements, and technological disruption.
For organizations looking to build resilient leadership teams, targeted executive search strategies will be critical in securing top talent that is forward-thinking and nimble enough to guide firms through a dynamically shifting financial landscape.
About Massey Henry
Executive Search, Coaching, Assessment, and Advisory Services
Michael Henry
Managing Partner, Massey Henry
John Sanders
Senior Partner, Board & CEO Services
Lisa Newey
Partner
Alex Bunyan
Partner & Head, Leadership Practice