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Carney Unveils Budget Amid Trade War 11/06 06:33
OTTAWA, Ontario (AP) -- Canadian Prime Minister Mark Carney's government
unveiled a budget Thursday aimed at making Canada less dependent on the United
States as President Donald Trump's trade war reshapes the allies' economic
relationship.
The budget, titled "Masters of Our Destiny," proposes $142.1 billion
Canadian (US$101.6 billion) multiyear spending and tax breaks, including
incentives to attract investment and billions for energy, infrastructure and
culture.
The government projects spending of $603 billion Canadian (US$431 billion)
and a $62.3 billion Canadian (US$44.5 billion) deficit for 2026-27, $3 billion
Canadian (US$2.1 billion) less than forecast in April.
Canada's combined federal, provincial and local government deficits amount
to 2.5% of its economy, compared with 8.5% in the United States, according to
International Monetary Fund figures cited in the budget.
"The United States is upending global trade," the budget declares.
It comes two days after Democrats gained control of the U.S. Congress in
midterm elections, weakening Trump's political position as the countries pursue
a possible trade agreement.
The government expects Trump's trade war to slow economic growth late this
year and early next year, with the budget forecasting growth of just 1% in 2026
and 1.7% in 2027.
A previously announced tax incentive would allow businesses to immediately
deduct qualifying investments, reducing Canada's effective tax rate on new
investment to 6.4%, less than half the comparable U.S. rate. The measure is
estimated to cost $36 billion Canadian (US$25.7 billion) over five years.
Carney, a former governor of the Bank of Canada and the Bank of England,
aims to double exports outside the United States by 2035 while forging closer
ties with Europe and Asia.
The budget advances plans for Canada's first national sovereign wealth fund,
a $25 billion Canadian (US$17.9 billion) initiative to invest in Canadian
companies and major projects.
It outlines $7.7 billion Canadian (US$5.5 billion) to strengthen Canada's
defense industry, with a goal of awarding 70% of military contracts to Canadian
firms. Canada says it is on track to meet NATO's target of spending 5% of GDP
on defense and security by 2035, though the budget does not fully account for
the cost.
Canada walked away from trade negotiations in August over U.S. demands that
Carney said threatened Canadian sovereignty and cultural protections.
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