Paper Published on US-Canada Trade War, Inflation, and AI Spending

A paper published on September 28, 2026, addresses several pressures on the US economy, including the escalating trade war with Canada. The authors suggest the US economy may be too strong, facing inflation risks from multiple sources. These concerns are fueled by global energy shocks from wars in Iran and Ukraine, the trade war itself, and a massive corporate spending spree on artificial intelligence.

The paper highlights that corporate spending on AI infrastructure alone is expected to hit around $1 trillion this year, according to JPMorgan. This unprecedented corporate investment, combined with low unemployment and strong consumer spending, creates a recipe for higher inflation. The confluence of these factors is drawing significant attention from economists.