Carney’s First Budget: A Plan to Wean Canada Off U.S. Dependence

Carney’s first federal budget aims to reduce Canada’s reliance on the United States

Canadian Prime Minister Mark Carney will unveil his government’s first full budget on Tuesday, a spending plan he says will provide “the answer” to economic strains caused by U.S. tariffs. Speaking after an Asia summit in South Korea, Carney framed the budget as a strategic response to new geopolitical and trade realities.

Carney, who previously led the central banks of Canada and the United Kingdom before entering politics this year, has positioned himself as the leader best placed to navigate the disruptions in Canada–U.S. relations under President Donald Trump.

Tariffs, targeted industries and economic pressure

Trump-era tariffs have hit Canada’s economy, raising unemployment in affected regions and squeezing targeted industries such as autos, aluminum and steel. “Where are we going to find the growth given the headwinds from the new US trade policy?” Carney asked reporters. “What this budget will do is provide the answer to that question.”

Key elements of the budget

Full details are being kept confidential until the finance minister presents the plan in Parliament, but the government has signaled several headline priorities:

• Increased defence spending to help Canada move closer to NATO spending targets.
• Investments in national infrastructure — including port expansion, energy projects, and the transportation and processing infrastructure needed to accelerate extraction of critical minerals in remote regions.
• A focus on economic sovereignty to diversify trade and reduce vulnerability to sudden policy shifts from the United States.

Finance Minister François-Philippe Champagne has described the package as “an investment budget” intended to “build the Canada of tomorrow.”

Parliamentary math and political stakes

Carney’s Liberals fell three seats short of a majority in the April election, meaning the government will need support or abstentions from opposition parties to pass the budget. Because the budget is a confidence measure, its defeat would trigger a fresh election.

The Conservative Party, led by Pierre Poilievre, is seen as the least likely source of backing; Poilievre has demanded measures such as deficit reduction in return for support. University of Ottawa public policy expert Geneviève Tellier told AFP she expects the budget deficit will be “very large.” The New Democrats — weakened in April’s vote — may prefer to abstain rather than force another poll.

“This is not a game,” Carney said, adding he is prepared to defend the budget’s proposals in an election if necessary. “I am 100 percent confident that this budget is the right budget for this country, at this moment.”

Observers will be watching how the government balances ambitious investments with fiscal constraints and whether it can secure enough parliamentary support to implement its plan.