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The first few days of the 2025 federal campaign bore a certain resemblance to a normal election. The norm-defying reality of Donald Trump finally intruded on Wednesday.
From Sunday through Wednesday, the major national parties rolled out a succession of proposals to cut taxes — the sorts of promises that have been made in election campaigns for as long as there have been taxes.
The Liberals went first, proposing to cut the lowest income-tax rate from 15 per cent to 14 per cent. A day later, the Conservatives proposed to drop the lowest rate to 12.5 per cent. The NDP countered yesterday with a proposal to raise the personal income exemption to $19,500 and remove the GST from certain “essentials” like energy bills and children’s clothes.
Different households would draw different benefits from these plans. But it’s also important to note by how much each would reduce federal revenues — $5.9 billion for the Liberals, $14 billion for the Conservatives and $15 billion for the NDP.
After a period of abnormally high inflation and when Canadians are worried about the cost of living, there are obvious reasons for political parties to promise tax cuts — and many Canadians stand to benefit. For the Liberals, Mark Carney had also promised to offset the money Canadian households would lose from repealing the carbon tax rebate.
But those are significant dents in federal revenues. And while federal revenues as a share of the economy were still higher in the last fiscal year (15.7 per cent) than when Justin Trudeau’s Liberals came to office (14 per cent in 2015), they were still higher as recently as 2007 (16 per cent). In 1992, before a succession of tax cuts, federal revenues were 18 per cent of GDP.
There are also some things that the federal government might need to spend more on in a changed world — things like national defence, which could require tens of billions of dollars more on its own.
(The New Democrats say they would reinstate the Liberal government’s changes to capital gains taxes, generating $17.4 billion in revenue — though the Liberals had nominally earmarked those funds for other purposes.)
Prime Minister Mark Carney says Canada’s old relationship with the United States is over, adding that Canada will respond with retaliatory action if U.S. President Donald Trump moves ahead with his proposed auto tariffs next week. Carney said he will likely speak to Trump in the next day or two — the first conversation between the two leaders since Carney was sworn in.
The biggest tax announcement of the campaign landed on Wednesday afternoon — in the form of Trump’s announcement of his intention to apply a 25 per cent tariff to automobiles imported into the United States.
Trump’s threats were of sufficient import that the major leaders convened unscheduled news conferences to respond. Carney announced he would be returning to Ottawa to convene a meeting of the federal cabinet’s Canada-U.S. relations committee. Conservative Leader Pierre Poilievre repeated his insistence that Trump should “knock it off.” NDP Leader Jagmeet Singh said Canada and Canadians need to “fight like hell.”
Trump’s tariffs present a real threat to the Canadian economy and to the security of many Canadians. But there is at least broad alignment on the need to retaliate against any American attack and to help Canadian workers who might be impacted.
The real debate is about what to do beyond the immediate battle.
‘The old relationship with the United States … is over’
In Windsor, Ont., on Wednesday — standing beneath the Ambassador Bridge that connects Canada and the United States — Carney proposed a $2-billion fund to support the Canadian automotive sector and auto workers and pitched a plan that would have more car parts built in Canada using Canadian resources. On Thursday in Ottawa, Carney suggested there would be similar strategies announced for other sectors.
“You will see a lot more of that. It’s part of an integrated industrial strategy that has the objective of having strategic economic autonomy here in Canada,” Carney said. “That’s what we want. We want to build out so that we are, literally, in control of our economic destiny. “
The Liberal leader held out the possibility that negotiations might result in Canadians in certain sectors being able to have confidence in a “deeper commercial relationship” with the United States. But in his prepared remarks, Carney said that “over the coming weeks, months and years, we must fundamentally reimagine our economy.
“We will need to ensure that Canada can succeed in a drastically different world,” Carney said. “The old relationship we had with the United States based on deepening integration of our economies and tight security and military co-operation is over.”
Taken seriously, that is a bracing statement — one that puts some onus on Carney to back it up with practical proposals.
By comparison, Poilievre’s proposal on Thursday was relatively modest — an increase in the limit on tax-free savings accounts for individuals who invest in Canadian companies. But Poilievre repeated his pledge to make Canada “strong” and “self-reliant.”
In B.C., Conservative Leader Pierre Poilievre told Trump to ‘knock it off’ with tariffs, a line he has used regularly on the campaign trail.
Poilievre held out the possibility that Canada and the United States could still be “friends” if Trump reversed course. If the American president chooses to “go down this road,” Canada would “fight back” and “build back,” he said.
“Within four years of a new, strong Conservative government, Canada will be completely rebuilt. We will rebuild our economy,” Poilievre said. “We will not be reliant on the U.S. anymore and the Americans will have lost the greatest trading partner and friend they ever had.”
A Conservative government, he said, would build pipelines and liquefied natural gas plants, “aggressively promote” mines and resource infrastructure and send goods to other allies.
The exact details and ramifications of such ideas are, of course, worthy of robust debate — not least for how increased fossil-fuel production might impact Canada’s climate commitments.
In that sense, Wednesday was not only the day that Trump reasserted his presence and a new economic crisis emerged. It was also the day that the very big questions facing the country came back into focus.
