Canada unveils $142B budget plan to boost economy amid US trade pressures

ASM, Philippine Canadian Inquirer
November 06, 2026

Photo courtesy: CTV News

OTTAWA, Canada — Prime Minister Mark Carney’s government has introduced a sweeping federal budget aimed at strengthening Canada’s economy and reducing its dependence on the United States as trade tensions continue to weigh on growth.

Finance Minister François-Philippe Champagne presented Budget 2026 in Parliament on Thursday, November 5.

The budget, titled “Masters of Our Destiny,” outlines CAD142.1 billion in multiyear spending and tax measures to encourage business investment, expand infrastructure, support energy development, and create jobs.

The government also plans to strengthen trade ties with countries outside the United States, Canada’s largest trading partner.

Trade tensions weigh on economic growth

The budget comes as tariffs imposed by US President Donald Trump’s administration continue to affect Canadian industries and disrupt trade between the two countries.

Canada expects its economy to grow by just 1 percent in 2026 before improving to 1.7 percent in 2027.

The government warned that US trade measures could slow economic activity in late 2026 and early 2027.

In response, Carney is seeking to reduce Canada’s reliance on the American market by expanding trade with Europe, Asia, and other regions.

His government aims to double Canadian exports to countries outside the United States by 2035.

The strategy includes attracting foreign investment and supporting Canadian businesses seeking new international markets.

Billions earmarked for investment and infrastructure

A major part of the budget focuses on encouraging companies to invest in Canada.

The government plans to introduce and expand tax incentives that would allow businesses to deduct qualifying investments more quickly.

One measure is expected to reduce Canada’s effective tax rate on new business investment from 13 percent to 6.4 percent.

The budget also advances a proposed CAD25-billion Canada Strong Fund to support Canadian companies and major development projects.

Investments in electricity infrastructure, nuclear energy, and critical minerals are among the government’s priorities.

Ottawa also plans to strengthen the country’s defence industry, with CAD7.7 billion allocated to support domestic production and related capabilities.

The government aims to award 70 percent of military contracts to Canadian companies.

More support for households

Beyond business investment, the budget includes measures to address the rising cost of living.

Ottawa plans to provide CAD22 billion in new affordability measures, including additional support for groceries and essential household expenses.

A temporary supplement under the Canada Groceries and Essentials Benefit could provide up to CAD339 for a single person without children and CAD679 for a couple with two children, depending on eligibility.

The government also plans to expand food support programs in remote northern communities.

Housing remains another priority, with measures intended to encourage construction and improve access to affordable homes.

Deficit projected at CAD62.3 billion

Despite the proposed spending and tax measures, the government expects a smaller deficit than previously forecast.

The budget projects CAD603 billion in federal spending for the 2026–27 fiscal year, with a deficit of CAD62.3 billion.

That is about CAD3 billion below the estimate released in April.

Ottawa also aims to balance its day-to-day operating spending with revenues by the 2027–28 fiscal year.

However, the government would still record an overall deficit because of capital investments and other spending.

The budget sets out the administration’s spending and policy priorities, but many of its proposed measures will still require parliamentary approval before they can take effect.