Ontario budget aims to 'tariff-proof' economy as U.S. trade uncertainty weighs
With real GDP growth projected to slow to just 0.8% this year, down from robust expansion in 2024, the government under Premier Doug Ford has prioritized stimulus in the form of industrial policy, tax credits, and emergency funds for affected companies. 'This spending is needed to weather the storm,' Finance Minister Peter Bethlenfalvy said, referring to the U.S. tariffs, adding the goal is to make Ontario's economy 'more resilient and self-reliant.'
At the center of the budget is a sweeping suite of manufacturing and business programs, including a $5 billion Protecting Ontario Account for distressed sectors and an enhanced Ontario Made Manufacturing Investment Tax Credit worth $1.3 billion over three years. Another key component defers select provincial taxes for six months starting April 2025, unlocking up to $9 billion in liquidity for 80,000 businesses expected to face trade-related disruptions.
CIBC (TSX:CM) economist Andre Grantham highlighted the fiscal consequences of this proactive stance, noting, 'Ontario's budget deficit is projected to widen to $14.6 billion in the current fiscal year (1.2% of GDP)… due in part to an expected tariff-led slowdown in economic growth as well as measures to help support households and businesses.' He added that contingencies embedded in the budget reflect 'the uncertain economic outlook,' with downside risks tied closely to the trajectory of U.S. trade policy.
The capital side of the budget is anchored by over $200 billion in infrastructure projects over ten years, including $61 billion for public transit, $30 billion for highways, and $56 billion in healthcare facility upgrades. Uniquely, the government aims to promote domestic industry by requiring made-in-Ontario materials for publicly funded builds, including cement, steel, and forestry goods, as a further buffer against foreign supply chain volatility.
In a rare bipartisan consensus on the challenge ahead, opposition leaders acknowledged the need to respond to tariff-related pressures while questioning the budget's priorities. Ontario NDP Leader Marit Stiles said, 'This budget is a test of whether this government will choose to strengthen Ontario and build a tariff-proof future over vanity projects and delaying critical infrastructure.' Liberal Leader Bonnie Crombie added, 'Will Doug Ford invest in your family—or in his friends?'
Ontario's financing strategy reflects its evolving fiscal profile, with $59.8 billion in total funding requirements this year, including $42.8 billion in long-term borrowing. While that is down from the $49.5 billion issued in 2024, padded by pre-borrowing, net debt is expected to increase by $33 billion this year, pushing the net debt-to-GDP ratio to 37.9%, though still under the government's 40% ceiling.
Economists warn that investor sentiment could sour if tariffs persist or deepen, disproportionately affecting trade-dependent provinces like Ontario. Creating a backstop through expanded contingency funds and industrial incentives, the 2025 budget attempts to signal resolve, but the ultimate success may depend less on Queen's Park... and more on Washington.
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Boston Globe
11 hours ago
- Boston Globe
Air Canada suspends restart plans after flight attendants won't return to work
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Los Angeles Times
14 hours ago
- Los Angeles Times
‘We remain on strike': Air Canada says flights to resume as union challenges order to return to work
TORONTO — The union representing 10,000 striking Air Canada flight attendants said Sunday it will challenge an order for them to return to work, adding that 'we remain on strike.' The Canada Industrial Relations Board ordered airline staff back by 2 p.m. Sunday after the government intervened and Air Canada said it planned to resume flights Sunday evening. 'We will be challenging this blatantly unconstitutional order,' the Canadian Union of Public Employees said in a statement. 'We remain on strike. We demand a fair, negotiated contract and to be compensated for all hours worked.' The strike has stranded more than 100,000 travelers around the world during the peak summer travel season. The country's largest airline said early Sunday in a release that the first flights will resume later in the day but that it will take several days before its operations return to normal. It said some flights will be canceled over the next seven to 10 days until the schedule is stabilized. Less than 12 hours after workers walked off the job, Jobs Minister Patty Hajdu ordered the 10,000 flight attendants back to work, saying now is not the time to take risks with the economy and noting the unprecedented tariffs the U.S. has imposed on Canada. Hajdu referred the work stoppage to the Canada Industrial Relations Board. The airline said the board has extended the term of the existing collective bargaining agreement until a new one is determined by an arbitrator. The shutdown of Canada's largest airline early Saturday was affecting about 130,000 people a day. Air Canada operates around 700 flights per day. According to numbers from aviation analytics provider Cirium, Air Canada had canceled 671 flights by Saturday afternoon, including 24 at Los Angeles International Airport — following a total of 199 on Friday. And additional 96 flights scheduled for Sunday were already suspended. The bitter contract fight escalated Friday as the union turned down Air Canada's prior request to enter into government-directed arbitration, which allows a third-party mediator to decide the terms of a new contract. Flight attendants walked off the job around 1 a.m. EDT Saturday. Around the same time, Air Canada said it would begin locking flight attendants out of airports. Last year, the government forced the country's two major railroads into arbitration with their labor union during a work stoppage. The union for the rail workers is suing, arguing the government is removing a union's leverage in negotiations. The Business Council of Canada had urged the government to impose binding arbitration in this case, too. And the Canadian Chamber of Commerce welcomed the intervention. Hajdu maintained that her Liberal government is not anti-union, saying it is clear the two sides are at an impasse. Passengers whose flights are affected will be eligible to request a full refund on the airline's website or mobile app, according to Air Canada. The airline said it would also offer alternative travel options through other Canadian and foreign airlines when possible. Still, it warned that it could not guarantee immediate rebooking because flights on other airlines are already full 'due to the summer travel peak.' Air Canada and the union have been in contract talks for about eight months, but they have yet to reach a tentative deal. Both sides have said they remain far apart on the issue of pay and the unpaid work flight attendants do when planes aren't in the air. The airline's latest offer included a 38% increase in total compensation, including benefits and pensions, over four years, that it said 'would have made our flight attendants the best compensated in Canada.' The union countered by saying the proposed 8% raise in the first year didn't go far enough because of inflation. Gillies writes for the Associated Press.
Newsweek
15 hours ago
- Newsweek
Air Canada Strike To Continue Despite Government Order
Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources. Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content. Flight attendants for Air Canada will continue to strike despite a back-to-work order issued by the Canadian Government, the Canadian Union of Public Employees (CUPE) said in an interview with Radio-Canada Sunday. The announcement came just a day after the Canadian government ordered the union and airline back into arbitration. The Canadian Industrial Relations Board acted on a directive from the country's Jobs Minister Patty Hajdu, ordering Air Canada "to resume airline operations and for all Air Canada and Air Canada Rouge flight attendants to resume their duties" by 2 p.m. ET on Sunday, Newsweek previously reported. Air Canada said previously that they would resume operations Sunday following the cabin crew strike that grounded hundreds of flights, causing cancellations affecting tens of thousands passengers. The strike came following requests for pay increases and better working conditions, CUPE said in a statement issued Saturday. "The Liberal government has invoked Section 107 of the Canada Labour Code to end a strike by Air Canada flight attendants fighting to end unpaid work and poverty wages," CUPE said in the statement. Newsweek has reached out to CUPE via email for more information Sunday. This is a breaking news story. Updates to come.
