Prime Minister Carney Unveils Budget Aimed at Boosting Canada’s Economy Amid Ongoing U.S. Trade Tensions

OTTAWA, Ontario — Canadian Prime Minister Mark Carney’s administration presented a budget on Thursday designed to reduce Canada’s reliance on the United States amid President Donald Trump’s ongoing trade war that is reshaping the bilateral economic relationship.

The budget, titled “Masters of Our Destiny,” outlines a multiyear spending plan of $142.1 billion Canadian (US$101.6 billion) together with tax incentives aimed at attracting investment, as well as substantial allocations for energy, infrastructure and culture.

The government forecasts total spending of $603 billion Canadian (US$431 billion) and a deficit of $62.3 billion Canadian (US$44.5 billion) for fiscal year 2026‑2027, which is $3 billion Canadian (US$2.1 billion) lower than the April projection.

Combined federal, provincial and municipal deficits represent 2.5% of Canada’s economy, compared with 8.5% in the United States, according to International Monetary Fund figures referenced in the budget.

The budget states that “the United States is upending global trade.”

The announcement follows two days after Democrats won the U.S. midterm elections, diminishing President Trump’s political leverage as the two nations explore a potential trade agreement.

The government expects Trump’s trade war to dampen economic growth later this year and early next year, projecting 1% growth for 2026 and 1.7% for 2027.

A previously announced tax incentive would permit businesses to immediately deduct qualifying investments, lowering Canada’s effective tax rate on new investment to 6.4% — less than half of the U.S. rate. The initiative is projected to cost $36 billion Canadian (US$25.7 billion) over five years.

Carney, formerly governor of the Bank of Canada and the Bank of England, seeks to double exports to markets outside the United States by 2035 and to deepen economic ties with Europe and Asia.

In August, Canada withdrew from trade negotiations after the United States demanded provisions that Carney said would jeopardize Canadian sovereignty and cultural protections.

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