Canadian Prime Minister Mark Carney’s government has introduced a major budget designed to reduce the country’s economic reliance on the United States amid President Donald Trump’s ongoing trade war. The budget, titled “Masters of Our Destiny,” allocates $142.1 billion Canadian (US$101.6 billion) over multiple years for spending and tax incentives. These measures aim to attract investment, boost energy, infrastructure, and culture sectors, and strengthen Canada’s economic independence.
The budget projects total spending of $603 billion Canadian (US$431 billion) for the 2026-27 fiscal year, with a deficit of $62.3 billion Canadian (US$44.5 billion). This deficit is $3 billion Canadian (US$2.1 billion) lower than previously forecast in April. The budget highlights that Canada’s combined government deficits stand at 2.5% of its economy, significantly lower than the 8.5% deficit in the United States, according to International Monetary Fund figures.
The budget comes as the U.S. midterm elections have weakened Trump’s political position, potentially impacting ongoing trade negotiations. The government anticipates that Trump’s trade policies will slow economic growth, forecasting just 1% growth in 2026 and 1.7% in 2027. Key measures include a tax incentive allowing businesses to immediately deduct qualifying investments, reducing Canada’s effective tax rate on new investment to 6.4%, less than half the U.S. rate. This 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 strengthening ties with Europe and Asia. The budget also 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. Additionally, it outlines $7.7 billion Canadian (US$5.5 billion) to bolster Canada’s defense industry, with a goal of awarding 70% of military contracts to Canadian firms.