Canadian Prime Minister Mark Carney’s government presents its budget on Thursday, a plan designed to reduce US reliance, which remains Ottawa’s priority despite President Donald Trump’s midterm election setback. Carney has argued that relations between Canada and the United States have been permanently altered and that pre-Trump tariff-free relations will not return.
Carney says Canada needs to urgently diversify its trade relationships and has named Thursday’s budget — his second since taking office last year — “Masters of our Destiny.” “At its core, our plan is about changing Canada’s growth model,” Finance Minister Francois-Philippe Champagne said this week.
Champagne, who will present the budget to parliament, added that the goals include boosting domestic commerce within Canada and “diversifying our trade.” “No matter what happens south of the border, no matter what happens in the world, we will be more resilient, we will be stronger, we will be more independent,” Champagne said Wednesday, after selecting a new pair of shoes for his budget speech, keeping a quirky Canadian tradition.
Trump’s tariffs have battered Canada’s economy but the future of his protectionist trade measures faced fresh uncertainty after his Republican Party suffered a crushing midterm defeat Democrats, who have been critical of tariffs on Canada, will take control of both the US House and Senate next year.
Senior Democratic Congressman Jamie Raskin told Canada’s public broadcaster CBC on Wednesday that his party is “going to put an end to these tariffs” and will be seeking to repair ties “with our best friends like Canada.”
But Canada’s minister responsible for US trade, Dominic LeBlanc, noted Wednesday that negotiations on tariffs will be held with Trump’s White House, not Congress.
Canada’s focus, including in the budget, will be on “diversifying our trading relationships,” LeBlanc said. Both Trump and Carney have in recent days sounded optimistic about the prospects of a trade deal, but there were similarly rosy predictions in August before talks broke down.
Major projects
The budget is expected to allocate funds towards the major national projects Carney has tagged as crucial to Canadian economic sovereignty, including infrastructure for energy production and critical mineral mining.
Champagne said there will also be support for workers hurt by Trump’s tariffs in sectors like autos and steel. The opposition is likely to raise alarm about deficit spending, but the deficit is expected to be lower than the CAN$78.3 billion ($56.3 billion) projected in Carney’s first budget last year.
University of Ottawa political scientist Genevieve Tellier noted that implementation of the budget will in part depend on “the impact of tariffs,” particularly whether Trump’s levies cause further job losses.
The Bank of Canada last month raised interest rates for the first time in three years, hoping to tame inflation caused by surging energy prices amid the Iran war. Budget bills in Canada are confidence votes and last year Carney’s government needed opposition support and abstentions to survive, but his Liberals have since secured a parliamentary majority.
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