Canada's new budget aims to curb reliance on single market

A sweeping federal budget unveiled by Canadian Prime Minister Mark Carney seeks to reduce Canada's reliance on the US market, but its uncertain passage through Parliament threatens to trigger an early election.

The Canadian federal government announced its 2025 budget on Nov 4, outlining new measures to help industries hit by US tariffs and trade disruptions.

Mesbah Fathy Sharaf, an economics professor at the University of Alberta, said that the budget reflects a broader effort by Canada to adapt to a more protectionist trade environment and reduce its dependence on the US market.

Carney said in a speech last month that "the decades-long process of an ever-closer economic relationship between the Canadian and US economies is now over".

"Many of our former strengths — based on close ties to America — have become our vulnerabilities," Carney said.

"I see it as an honest reflection of where things are heading," Sharaf told China Daily.

"The US is becoming more inward-looking, and Canada is realizing that it can't depend on one market forever," he said. "I don't think Carney was just making a political statement — he was acknowledging a real shift."

The budget commits more than C$25 billion ($17.8 billion) to support affected sectors and an additional C$25 billion by 2030 to enhance trade facilitation. It also highlights the government's goal of"building a new economic and security relationship with key partners".

"Canada is clearly looking East and West, such as Europe and the Asia-Pacific, for new opportunities," Sharaf said.

"We already have strong trade agreements in both regions, and now the government wants to make those ties more active. This isn't just about spreading risk; I think it's about reshaping how Canada sees itself in the world," he said.

"The tariffs in recent months have hit Canadian industries hard — particularly steel and aluminum, and to a growing extent, some manufacturing and auto sectors.

"In my opinion, this new budget is the government's way of saying that Canada needs to be ready to stand on its own when trade tensions rise," he said.

The new budget is considered a confidence motion — if it fails to gain majority support, the government could be forced to resign and an early election may be called.

Sharaf said that political uncertainty could briefly unsettle markets if the budget fails to pass and triggers an early election.

"Elections always bring some uncertainty — businesses pause,investors hold back and even partners like the US wait to see what happens.

"But elections can also bring clarity. If Canadians choose to back this new direction, the next government will have a clear mandate to keep pushing for diversification," he said.

In the end, he said, "it's a reminder that Canada's economy can't depend on just one partner".

Canada's new federal budget offers financial relief to industries hurt by US tariffs, but the measures are seen as a temporary response, according to Ron Stagg, a professor of history at Toronto Metropolitan University.

"The prime minister is saying that we cannot expect to have the same trade relationship with the US in the future," Stagg told China Daily.

He said that Canada's push to diversify its economic ties had already begun before the latest tensions.

"The search for overseas markets was already underway. The current situation with regard to the United States has accelerated the search."

Regarding Ottawa's C$25 billion package to support sectors most affected by US tariffs and trade disruptions, Stagg described the policy as largely defensive.

"Aid to hard-hit sectors of the economy is seen by the government as a short-term solution.

"The government is hoping to increase economic activity within Canada by providing financial incentives and by fast-tracking approval for projects seen as of national importance," he said.

gaoyang@chinadailyusa.com