Canada has fiscal room to withstand tariff war, new finance minister says
Canada’s new finance minister said the government needs to preserve its fiscal ability to support households and businesses if Donald Trump’s tariff threats materialize into an economic shock.
“I’m reassured that the government has the fiscal room if there’s a decision that has to be made to intervene significantly,” Dominic LeBlanc said Wednesday on a political podcast called The Herle Burly.
“I don’t think any responsible government would allow the economy of the country to be permanently scarred by what is the decision of another government,” he told host David Herle.
Leblanc became finance minister Monday after the stunning departure of Chrystia Freeland, who resigned just hours before she was set to deliver an update on the country’s finances.
Still, LeBlanc acknowledged in the interview that the country’s fiscal position “isn’t terrific.”
The fall fiscal update revealed deeper deficits, driven in part by billions in planned tax relief for companies making investments in Canada. The government ran a $62 billion shortfall last year — a breach of Freeland’s promise to keep it near $40 billion.
LeBlanc reiterated that Indigenous contingent liabilities — money the government must set aside to pay out potential future legal losses — were the primary reason the fiscal guardrail was broken.
“It’s not that somebody turned on the tap and spent it on something, it’s an accounting legal advice requirement to be transparent about the high risk of future liability,” he said.
LeBlanc said he expected to meet with Bank of Canada Governor Tiff Macklem on Wednesday and hoped to speak to bank executives over the coming days. He also intends to ask other cabinet ministers for their submissions for the 2025 budget he is planning for
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