OTTAWA — On the first anniversary of a surprise election victory amid punishing Trump tariffs, Canadian Prime Minister Mark Carney is plotting a cautiously optimistic path through the global economic uncertainty posed by the U.S.-Israel war in Iran.
Carney’s finance minister, François-Philippe Champagne, on Tuesday presented a midyear fiscal check-in replete with the greatest hits of Liberal governing verbiage.
create time. Canada Strong. Control what we can control. A fractured world – all the rhetoric of a Prime Minister elected on a promise to save Canada from an untrustworthy neighbor and a scary world.
Canada’s fiscal situation could worsen.
Carney’s first year in office resulted in a deficit of C$66.9 billion. Last fall’s annual budget projected C$78.3 billion in red ink for 2025–26. The government earned more revenue than anticipated and cut program expenditures.
Tuesday’s Spring Economic Update also committed billions to new measures, including a recently announced sovereign wealth fund and a skilled trade recruitment blitz aimed at hiring thousands of workers who will bring “nation-building” projects to life in the coming years.
The document claims that Canada’s economy is growing at the second fastest pace in the G7. Champagne, who spoke to the “Playbook Canada” podcast before its public unveiling, compared it favorably with its Canadian peers.
He also brought a message from the recent World Bank/IMF meetings in Washington.
“When I was in Washington, people were talking about the fog of uncertainty and Canada is kind of a shining light in this fog,” he said.
“We’re growing almost twice as much as Germany, twice as much as Japan, three times as much as Italy. It’s not that we’re just growing, but we’re growing at a pace that’s very different than some of our peers.”
The fiscal update entertains the idea that events could intervene – and create a radically different future for the Canadian economy.
The document presents a pair of hypothetical scenarios that differ from its baseline projections: one brighter, one bleaker in response to the Middle East conflict.
In the “high investment” scenario Canada, a net oil exporter, would benefit from persistently high oil prices – and avoid widespread disruption – increasing nominal GDP by $37 billion annually.
The “Global Supply Disruption” scenario paints a picture of macroeconomic chaos that would lead to high inflation, weak business and consumer confidence, and reduced investment in Canada’s energy sector due to “structural uncertainty about future energy demand.”
Since trade talks repeatedly failed to show clear signs of progress last year, Carney’s government has insisted Canada still has the world’s best trade deal with the United States.
Ottawa credits the United States-Mexico-Canada Agreement with shielding 85 per cent of Canada’s good exports from disruptions – a key figure repeated in the financial update.
The government reported exports to be stable, although they declined to tariff-exposed sectors.
Champagne’s document cited Export Development Canada’s March 2026 survey, which found that 65 per cent of exporters plan to enter new markets in the next few years.
The government said business sentiment has improved and companies are diversifying.
The SEU pointed to a Finance Department survey that found most private sector economists expect tariffs to remain in place in the near term.
