Ontario tables massive deficit in 2025 budget amid Trump tariffs
TORONTO: Ontario, Canada’s most populous province and manufacturing powerhouse, on Thursday forecast its widest budget deficit since the height of the pandemic, more than doubling in size, and a slower move into surplus as it increased spending to support the economy in a trade war with the United States.
The province’s ruling Progressive Conservative Party retained power in a February election, with Premier Doug Ford calling the vote more than a year early, arguing that he needed a stronger mandate to fight U.S. President Donald Trump’s tariff
Ontario sends more than three-quarters of its exports to the United States, including autos, steel and aluminum, which are facing hefty U.S. duties.
The province said its deficit would increase to C$14.6 billion ($10.4 billion), or 1.2% of gross domestic product, in the current fiscal year, its widest by far since 2020-21, from an estimated C$6 billion in 2024-25. The fiscal year began on April 1.
A deficit is also expected in 2026-27, of C$7.8 billion, before a shift into surplus in 2027-28, one year later than was projected in a fiscal update in October. A C$2 billion reserve is set aside in each fiscal year.
ousing starts in 2025 are projected to be around 2,800 units lower than in 2024 and job creation is expected to be cut in half. The province will be spending $16.2 billion on interest and other debt charges in 2025-26, more than the base budget for post secondary education or justice.
The drop in housing starts is another sign that the Ford government is struggling to hit its goal of getting 1.5 million homes built by 2031, which would require 100,000 housing starts per year.
But all of the projections are being made in a world of constant uncertainty when it comes to what President Donald Trump may or may not do with future tariffs. If the economic situation turns out worse than expected, the deficit could be as high as $17.1 billion.
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The budget also shows that Ontario’s total debt will rise to $489.8 billion in 2025-26. During the 2018 campaign, the Progressive Conservatives said if the Kathleen Wynne Liberal government was re-elected, it would “pile onto our debt.”
Since 2020, Ontario’s debt has risen by about 21 per cent under the Ford government, according to the budget.
Budget offers ‘little hope and no reassurance,’ NDP says
Leader of the Official Opposition NDP Marit Stiles called the document a “Band-Aid budget.”
“For families wondering how they’ll make ends meet this summer, for overworked health care or education workers, for auto workers who are worried about their livelihoods, this budget delivers little hope and no reassurance,” she said.
Liberal finance critic Stephanie Bowman slammed the government for failing to meet the moment. The Tories should have cut taxes to help families address the affordability crisis and the impact of Trump’s tariffs, she said.
“It’s an understatement to say that what the finance minister delivered is underwhelming and insufficient,” Bowman said.
Green Party Leader Mike Schreiner said the government doesn’t have the fiscal capacity it should to address tariffs because of past spending decisions.
“This is the government that spent $3.2 billion sending $200 cheques to millionaires and billionaires,” he said.
