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Canada’s 2026 budget faces no real threat in Parliament. Prime Minister Mark Carney’s Liberals have held a House of Commons majority since April. A Conservative “no” can’t bring down the government.
The harder test is in Washington, where formal trade talks should restart after a Carney-Trump call on Oct. 31.
Finance Minister François-Philippe Champagne tabled the plan, titled “Masters of Our Destiny”, on Thursday, Nov. 5. It adds C$142.1 billion in new tax breaks, spending and other measures over five years, The Canadian Press reported.
That is about US$100.6 billion at the Bank of Canada’s Nov. 9 rate of C$1.4123 per US dollar. All dollar figures below are Canadian unless marked US$.
For Americans, the point is in the budget’s own words. Ottawa wants a Canada “less reliant on a single trading partner,” its trade chapter says. That partner is the United States.
C$142 billion is new measures, not the deficit
The headline number is easy to misread. It is not the deficit, and it is not the whole budget. It counts the new measures announced in the budget over five years, including tax breaks.
The largest single item is a C$36.1 billion “productivity mega deduction” for business investment, first announced in September. Another C$22 billion goes to affordability measures, according to the Finance Canada release. That includes a one-time 50% top-up of the groceries and essentials benefit, paid in early 2027.
The deficit for 2026-27 is C$62.3 billion (about US$44.1 billion), roughly C$3 billion lower than Ottawa projected in the spring. Bloomberg put it at about 1.8% of GDP. Ottawa has spent most of this year’s oil-price windfall of about C$7.8 billion, Bloomberg said.
The budget shows deficits above C$50 billion in each of the next four years. Debt charges of C$60.2 billion this year now top the C$57.4 billion set aside for health care, CP reported.
How Ottawa plans to sell more beyond the US
The central goal is “doubling exports to non-U.S. markets by 2035,” according to the budget. It leans on two funds already in place: the C$5 billion Trade Diversification Corridors Fund and the C$1 billion Arctic Infrastructure Fund. Both pay for ports and transport links to move goods overseas.
More than C$50 billion goes toward doubling the capacity of Canada’s power grid by 2050, Finance Canada’s key measures list says. Tariff relief for workers and businesses hit by US duties has reached “nearly $44 billion” (about US$31.2 billion).
The starting point is less lopsided than many reports suggest. In September, 29.8% of Canada’s goods exports went to countries other than the US, Statistics Canada’s trade release shows. That leaves about 70% going to the US.
The often-quoted “three-quarters” figure is out of date. Even so, doubling non-US sales in nine years is a steep target when that share slipped from 30.1% in August.
What Canada’s budget means for US exporters and defense firms
Canada is a top destination for American goods, and that trade is already shrinking. US goods exports to Canada fell to US$333.6 billion in 2025, from US$350.6 billion in 2024, Census Bureau data show. By our calculation, that is a 4.8% drop. Imports from Canada fell 7.3%, to US$381.9 billion.
The tariff fight drives much of this. After talks broke down in August, President Donald Trump imposed a 50% levy on US$20 billion of Canadian goods, Al Jazeera reported, drawing on AFP, AP and Reuters. Canada hit back with matching tariffs on US steel, dairy, appliances, farm equipment, paper and electronics. The budget says Canada’s counter-tariffs on US autos “remain in place.”
Defense is the second channel. Canada says it met NATO’s 2% of GDP benchmark in 2025-26 and has pledged 5% by 2035, the budget’s security chapter says. It plans more than C$700 billion in defense investment over five years.
Under its Buy Canadian policy, Ottawa wants Canadian firms to be “the key partners.” Its February defense industrial strategy aims to lift the domestic share of military buying from about a third to around 70%, Global News reported.
Carney said then that Canada would buy from abroad “only after exhausting” domestic and allied options. That is a direct threat to US contractors’ share of a fast-growing market.
A majority in Parliament, mixed reviews outside it
The Liberals hold 173 of the House’s 343 seats, according to the Commons party standings. Several Conservative and NDP MPs crossed the floor, and Carney then won three by-elections on April 13, Global News reported.
So the budget avoids the knife-edge confidence vote of a year ago, when Carney’s minority passed its first budget 170 to 168, GZERO Media reported. As of Nov. 10, the House had recorded no vote on the 2026 budget, according to its votes page.
Opposition leaders attacked it anyway. “This is a costly credit card budget that Canadians can’t afford, and Conservatives will vote no,” Conservative Leader Pierre Poilievre said.
NDP Leader Avi Lewis asked, “Where is the mega deduction for my grocery bill?” Champagne’s answer: “With this budget, we will build the strongest economy in the G7.”
Economists split. For a country short on productivity growth, “tax relief and a major infrastructure push are hard to dislike,” wrote BMO’s Shelly Kaushik and Robert Kavcic. Desjardins’ Randall Bartlett told Bloomberg, “I worry there’s some creative accounting going on under the hood.”
Weak jobs data moved markets more than the budget did.
Canada lost 4,700 jobs in October, and the loonie fell 0.7% on Nov. 6 to 70.87 US cents. That was its weakest level since Oct. 19, Reuters reported (via Kitco).
Trade talks restart as Democrats take Congress
Washington has changed since Ottawa drafted the budget. Democrats won both chambers on Nov. 3, as we reported in our midterm results roundup. Republicans lost in Maine and Michigan, two states where tariffs were a campaign issue, CTV News reported.
Ottawa says that changes nothing yet. Dominic LeBlanc, the minister for Canada-US trade, noted that the current Congress sits until January.
The results are “not going to change the work that we have to do in the next two weeks,” he said, The Canadian Press reported. Our explainer on what a Democratic Congress can change covers what lawmakers can and can’t do.
After the Oct. 31 call, Carney said both teams “will now be working in the coming weeks” on a deal. A source told The Globe and Mail that Trump had ordered formal talks to resume.
Ottawa wants relief on autos, steel, aluminum and lumber. It will now negotiate with a White House run by Stephen Miller, who became chief of staff on Nov. 9.