U.S. trade war casting long shadow over N.L.'s economic future

Newfoundland and Labrador's economic forecast for the coming year has been charted, but looming large over the future is the uncertainty from the trade war with the U.S.

The finance department says President Donald Trump's tariffs will hurt the province's economic growth, employment and inflation.

On Tuesday, ahead of tabling the government's latest budget, Finance Minister Siobhan Coady said  Newfoundland and Labrador isn't seeing the direct impact from tariffs at the moment, but is being hit by broader forces.

"We've been through, I don't know, devastating floods, hurricanes, forest fires. We've been through cyberattacks together," she said. "There might have been a pandemic in there too, and now we have tariffs. If I see the locusts, I'll know I've come full circle."

Foregoing balanced budget

Coady said the province is dealing with a period of global instability.

"There's a lot of uncertainties and now is not the time to make dramatic changes to ensure that we're back to balance," Coady told reporters.

She described the 2025-26 budget as "stable, secure" and said putting together a budget is always a challenge due to outside factors, not limited to the U.S. threat of punishing tariffs.

The budget also anticipates the consumer inflation rate increasing by 2.5 per cent, "mainly due to Canadian counter-tariffs on the United States driving up consumer prices."

But she said inflation driven by tariffs will be "partly offset" by the removal of the consumer carbon tax.

The province had already announced a $200 million contingency fund to tackle possible U.S. tariffs.

If government spends that money, it will increase the deficit.

Coady said they are looking at an uncertain global situation and want to be both "responsible and nimble" should they need to tap into that contingency fund.

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