With Budget 2025 consultations now underway, Prime Minister Mark Carney faces a growing list of challenges: escalating U.S. tariff threats, mounting health care pressures, and the need to stabilize trade while protecting domestic priorities. As patients look abroad for faster care and critics warn of widening policy gaps, the federal government is pressed to deliver more than just promises.
Carney Convenes Premiers as Canada Braces for U.S. Tariffs
Prime Minister Mark Carney scheduled meetings with his cabinet and provincial premiers to prepare for potential fallout from U.S. President Donald Trump’s threat to impose 35% tariffs on Canadian goods by August 1. Trump’s justification, citing fentanyl trafficking and trade imbalances, has come under scrutiny, with a Manhattan Institute report showing nearly all fentanyl enters through the Mexican border.
Business leaders criticized Trump’s tariff threats as destabilizing, though economists argued the actual economic effect would be minimal due to widespread CUSMA compliance. The effective tariff increase would be marginal, but the uncertainty is delaying investment and complicating trade negotiations.
Despite trade tensions, foreign investment in Montreal rose 55% in the first half of 2025 to $1.69 billion, nearly half of which came from American companies. However, business leaders are more concerned about restrictive immigration policies from both the federal and Quebec governments that may affect long-term growth.
Carney’s critics question whether his “elbows up” trade strategy, including last month’s digital tax concession, has yielded results. Observers also warn that Trump’s authoritarian negotiating style, marked by threats, pressure tactics, and abrupt shifts, is undermining U.S. democratic institutions. His actions targeting universities, the Federal Reserve, and trade partners raised concerns about unchecked executive power and the reliability of U.S. commitments.
In response, leaders like Green Party Leader Elizabeth May urged the federal government to respond strategically to Trump’s tariff threat by reinstating the Digital Services Tax and establishing a strategic potash reserve to target U.S. agricultural interests. She rejected retaliatory tariffs and emphasized smarter economic measures.
Toronto Region Board of Trade CEO Giles Gherson criticized the tariff threat as an irrational bargaining tactic and called on the government to focus on long-term resilience. He recommended boosting productivity, enhancing internal cohesion, and expanding Canada’s global trade footprint.
Sadly, uncertainty also looms for the Canadian pharmaceutical industry. Trump has proposed imposing 200% tariffs on pharmaceuticals unless production is relocated to the United States within 12 to 18 months.
According to The Globe and Mail, the Canadian pharmaceutical industry is bracing for potential disruption, though no tariffs have been implemented to date. With Canadian exports valued at $7 billion last year, the proposal could significantly impact trade, particularly as most U.S. drug imports come from India, the EU, and China.
2025 Pre-Budget Consultations Launch with Focus on Cuts, Jobs, and Growth
Finance Minister François-Philippe Champagne launched the government’s pre-budget consultations for Budget 2025, opening an online portal through August 28, to collect public input. The government is focused on lowering costs, job creation, housing, national security, and long-term economic growth.
As part of the government’s shift toward reduced spending and increased investment, federal departments have been asked to cut program spending by 7.5% starting next spring, rising to 15% over three years.
New Procurement Policy to Protect Domestic Market amid U.S. Trade Talks
As trade uncertainty escalates, the federal government has introduced a new “Interim Policy on Reciprocal Procurement,” which restricts bidding on federal contracts to countries offering reciprocal market access. The policy will roll out in two phases: the interim phase, effective July 14, focuses on supplier location, and a later phase that will determine eligibility based on the origin of goods and services offered.
Alongside this, the Office of the Procurement Ombud (OPO) released a study warning of inefficiencies in federal construction contracts, urging better scope definition and the adoption of alternative dispute resolution to reduce costly delays. The OPO encouraged the use of Alternative Dispute Resolution services to maintain project timelines and budgets effectively.
Carney Tackles Wildfires, Strengthens Ties with EU and Mexico
Prime Minister Carney also faced domestic and diplomatic tests this week. On July 14, he spoke with European Commission President Ursula von der Leyen to deepen cooperation on clean technologies, trade, and defence, reaffirming progress made since the Canada–EU Summit.
Later, Carney chaired a virtual Cabinet meeting and convened the Incident Response Group to manage the wildfire crisis. The Incident Response Group focused on federal assistance to Manitoba, including the Canadian Armed Forces’ evacuation of over 1,500 Garden Hill First Nation residents, with ongoing coordination involving provinces, First Nations, and international partners.
Carney also spoke with Mexican President Claudia Sheinbaum to express gratitude for Mexico’s deployment of firefighters to Manitoba. They also discussed strengthening economic ties and agreed to maintain close cooperation following their recent G7 meeting.
Canadian Healthcare Under Strain: Patients Seek Surgery Abroad Amid Reform Gaps
Healthcare pressures continue to mount across Canada. An opinion piece byMacdonald-Laurier Institute senior fellow Nigel Rawson and Canadian PKU and Allied Disorders Inc. CEO John Adams tackled the criticism faced by the Trudeau government’s health initiatives, such as the Canadian Dental Care Plan (CDCP) and national pharmacare, due to underfunding and the potential to widen health care inequities.
The Canadian Dental Association has raised concerns about the plan’s administrative complexity and long-term sustainability. Despite an estimated savings of $850 per patient per year from the CDCP, funding levels imply a large gap in sustaining coverage for approximately nine million Canadians.
Similarly, the Pharmacare Act, which aims to provide $1.5 billion over five years, covers select medications like contraceptives and diabetes drugs, but lacks comprehensive funding and accessibility. The Parliamentary Budget Officer estimates the initial phase will cost more than budgeted, adding $1.9 billion in federal expenses over five years.
Simultaneously, rising costs and wait times are pushing some Canadians to seek care abroad. In Calgary, Dione Amundson requires emergency surgery for a perforated intestine, a condition that can be life-threatening if not treated promptly, which could cost her $25,000. Another patient, Doug Punt opted to undergo a double hip replacement in Lithuania to avoid a lengthy wait at home.
Despite the Alberta government’s initiatives to reduce wait times, such as the Alberta Surgical Initiative, many patients like Amundson and Punt still experience delays.
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