Mark Carney Unveils Ambitious Budget to Tackle US Tariff Challenges

Mon Nov 10 2025 21:58:38 GMT+0200 (Eastern European Standard Time)

Canada's Prime Minister Mark Carney presents a bold federal budget aimed at mitigating the impacts of US tariffs, proposing C$280 billion in new spending.

In response to the economic challenges posed by US tariffs, Canadian Prime Minister Mark Carney has introduced his first federal budget, which aims to transform the economy with a C$280 billion investment over five years. The budget, while increasing the national deficit to C$78 billion, plans significant spending to enhance productivity, competitiveness, and resilience against US trade barriers. However, it also includes cuts to public services and a reduction in federal employment, prompting a mixed response from political leaders and economic analysts.

Canada's Prime Minister Mark Carney has put forward his first federal budget, which lays out an ambitious plan to transform Canada's economy and deal with the challenge of US tariffs.

Billed as an investment budget by the government, the fiscal plan increases Canada's deficit to C$78bn ($55.3bn; £42.47bn), marking the second largest deficit in history.

The spending is offset by plans to attract C$1tn of investment into Canada over the next five years; the federal government argues that more restrained spending would eliminate vital social programmes and funding for Canada's future.

However, the budget does outline cuts, including slashing the size of the federal workforce by around 10% in the coming years.

The budget was presented by Canada's finance minister, François-Philippe Champagne, in the House of Commons late on Tuesday afternoon. In his budget speech, Champagne warned that Canada is facing a time of profound change and that bold and swift action is needed to ensure the country prospers.

Throughout the budget, references to uncertainty and the need for protectionist measures arise, particularly due to US tariffs on Canadian goods. President Donald Trump's broad 35% levy has already resulted in job losses in affected sectors.

To counter this, the budget proposes C$280bn in spending over the next five years aimed at strengthening productivity, competitiveness, and resilience. Proposed initiatives include updating trade infrastructure and financing support for businesses impacted by tariffs.

The budget aims to position Canada as a more attractive destination for investment compared to the US, with efforts to reduce regulatory hurdles. However, analysts warn that parts of the budget may be difficult for Canadians to accept, especially amidst rising living costs.

On defense, the budget allocates nearly C$82bn over five years—marking the largest military funding in decades, in line with NATO commitments.

Significant investments are also planned for artificial intelligence, with nearly C$1bn dedicated to boosting AI integration in government operations.

Carney forewarned of sacrifices including a reduction in the size of federal government employment, with the potential loss of 40,000 jobs by 2029. Immigration targets are also set to stabilize new admissions.

The budget must pass through Canada's parliament where Carney's minority government requires support from other parties, facing criticism from opposition MPs for increasing the national deficit without addressing immediate affordability concerns for Canadians.

The proposed budget remains crucial as Canada navigates its economic landscape amidst ongoing global trade tensions.