Perennial uncertainty of tariffs looms over B.C.'s budget

CBC

05-03-2025

The B.C. government's 2025/26 budget came as the province is constrained by the start of a trade war prompted by U.S. tariffs, but political watchers say B.C. has many unmet needs and also needs a long-term vision.
The budget projected a record deficit of $10.9 billion as the government committed to spending on core services and set aside billions in contingency funds on Tuesday, the same day that 25 per cent U.S. tariffs on Canadian imports went into effect.
But while the record deficit came under fire from many pro-business groups, a political science professor says that the B.C. NDP government is in a tight position, and residents would have to get used to short-term commitments and diversification as the province tries to insulate itself from outside threats.
University of B.C. professor Stewart Prest says the government also needs to think about a long-term vision even as it tries to maintain flexibility in the face of tariff uncertainty.
"This budget, even though it is still maintaining and building out [services], it is not fulfilling every gap," he told CBC B.C.'s budget special.
"And these are the kinds of things that can, in the long term, put the province in [an] even bigger hole."
Some labour unions were unhappy with the lack of funds for election promises, like hospital towers in Langley and Nanaimo and counselling staff in schools.
Prest says that the lack of outsize spending on sectors like public transit — where the budget largely stuck to previous commitments despite funding crises — could come back to haunt it in future.
"People [having] to make a choice between education or just going into the the workforce, because they don't have the transit to get to the place where they get their skills upgraded ... then it is, over the long term, going to be that much worse for for the economy," he said.
To spend or cut in the long term?
The Opposition B.C. Conservatives have argued that the record deficit projection cannot simply be attributed to the tariffs alone, even as Finance Minister Brenda Bailey says the lack of "splashy announcements" was necessary to respond to the trade war.
Alex Mitchell from the Abbotsford Chamber of Commerce welcomed the government encouraging customers to shop local and the government's promises to expedite resource projects in response to the tariffs.
"But what concerns me the most is that, as we head into this trade war situation, we're really reducing our fiscal firepower by increasing debt," she said. "And that's something that is going to harm us in the long term."
On the other hand, Alex Hemingway from the Canadian Centre for Policy Alternatives says running a deficit is the responsible thing to do, and there was a need to protect services.
The economist says the government should look to generate more revenue for spending programs in the long-term, in the form of growing the economy and progressive taxation on wealthy landowners.
"There's a huge amount of catching up to do, both in terms of rebuilding public services and investing in infrastructure that's been neglected for too long," he said.
'Perennial situation of uncertainty'
Prest says that the "perennial situation of uncertainty" with U.S. President Donald Trump and his tariffs means there will be continuing unmet needs in B.C., as the government tries to square the circle of being fiscally responsible and funding key programs.
At a Tuesday news conference, Premier David Eby announced there will be support for businesses and individuals affected by the tariffs but didn't elaborate on who will qualify or how it will work.
Prest noted that there wasn't much specific spending allocated in the budget for industries that are most affected by tariffs, and the days ahead were uncertain as the trade war continues to develop.
"The province is looking to the federal government to play a leading role there," he said.
"So, there is still more to be said on a number of these issues, but [government officials] are really in a bind."