Canada’s Carney: The decades-long process of economic integration with the US is over

Canadian Prime Minister Mark Carney is delivering a major speech ahead of his first budget to be

The US has fundamentally changed its approach to tradeIt’s not a smooth transition, it’s a ruptureThe decades-long process of economic integration with the US is overOur relationship with the United States will never be the sameNow is not the time to be cautious

Carney reportedly met with opposition leader Pierre Poilivre earlier and described Carney’s proposals as “very reasonable” but called for lower deficits. Estimates for the deficit range from C$50-$100 billion. Canada’s debt is relatively manageable with deficits about half of those in the US vs GDP and total debt to GDP at about 42%.

The budget is slated to be delivered November 4 and he said it will be about:

BuildingTaking controlWinning

Carney said they will be making ‘generational investments’.

There is no prosperity without securityPromises largest defense spending in generationsMentions high-speed railOur next tranche of major projects will be announced before Nov 1680% of European steel is manufactured in Europe but only 40% of the steel we use is made hereBudget will include prioritizing Buy Canadian provisions on steel, aluminum and other industriesWe will be our own best customerFederal spending has risen 7% y/y for the past decadeWe will have to do less of some of things we want to doBudget will protect critical programs that allow Canadians get ahead, cites dental careWe will make the national school food program permanent and national childcare programOur economy is holding up but if we don’t act now, these pressure will growWe won’t transform our economy easilyWe will work relentlessly to cut waste and drive efficiency

The speech has wrapped up but didn’t include much that we don’t already know. We’re getting the contours of an aluminum/steel deal with the US as Canada cuts off foreign imports but gets back access to the US market in exchange. We’ll see if that’s with a 15%, down from 50%, or maybe even less.

Otherwise, I think he’s laying the groundwork for running a very large deficit on infrastructure projects but overall these were very familiar themes.