Carney lays out plan to help economy along amid Trump-induced market chaos
Liberal leader says U.S. recession is likely after Trump tariffs prompt a 'financial crisis'
Liberal Leader Mark Carney said Monday he has a plan to prop up the Canadian economy as the U.S. careens toward a recession resulting from President Donald Trump's aggressive tariff actions, creating what Carney called a "financial crisis" that has the potential to undo the international trading system.
Carney said he got Canada through the 2008-09 financial crisis and helped the U.K. deal with the fallout from Brexit as the central banker for each country — and he can do it again as prime minister in this perilous moment.
Meanwhile, Conservative Leader Pierre Poilievre took aim at Carney on Monday, saying the Liberal leader's "trophy titles" are not enough and he can't be trusted because he supported policies like a carbon tax in the past. "We need a new Conservative government for a change," Poilievre said.
The Canadian and U.S. stock markets have been volatile since Trump announced unexpectedly high tariffs on virtually every country in the world last week, a policy decision that has wiped out trillions of dollars of wealth and prompted extreme anxiety among some retirees.
Carney said he won't "sugarcoat" what's to come in the weeks ahead if Trump doesn't pull back from some of his more aggressive measures like huge tariffs on goods coming from the European Union, China, Vietnam and others — not to mention those already levied on Canada and Mexico.
"There may be some tough days ahead, but I also want to reassure that we are prepared," Carney said.
Carney said he spoke to the governor of the Bank of Canada and the finance minister Monday to check in on the economic welfare of the country and its financial institutions amid huge swings in the stock and commodities markets.
Carney said Canada's financial institutions are "rock solid," and there's no major issue with global banks as there was during the Great Recession.
Instead, Carney said the panic is now driven exclusively by Trump and his tariffs, which he said will be "fundamentally damaging."
He said the risk of a U.S. recession has "gone up significantly," and he "takes no joy in it becoming more likely."
"What's going on is a direct consequence of President Trump's unjustified tariffs against Canada, Mexico and then the world," Carney said. "This is what we have been concerned about, and indeed this is what we've been trying to warn the president of the United States about."
Short-term strategies
In the short term, Carney said he has relaxed employment insurance requirements to get cash to laid-off workers right away, and he's deferring corporate tax payments and GST remittances to give companies some liquidity. The Business Development Bank of Canada (BDC) will also deploy more capital to tariff-affected industries.
To help seniors who are fearful of selling investments in a down market, Carney said if re-elected, his government would reduce the amount of money retirees must withdraw from their registered retirement income fund (RRIF) by 25 per cent. He's also promising to top up the guaranteed income supplement to throw low-income seniors a lifeline.
Over the medium term, Carney said a re-elected Liberal government would "accelerate major investments" to spur economic growth, adding Canada should build out natural resources projects to wean itself off U.S. and other foreign energy supplies.
He said getting Western Canadian oil to eastern markets will make the country collectively richer, and refineries won't have to import 500,000 barrels of oil a day from abroad.
Carney said he has also left instructions with senior bureaucrats to begin dismantling internal trade barriers while this election is underway.
The other part of Carney's plan is a rapid diversification of trade with what he's calling "reliable" partners as he looks beyond North America for growth while the Canada-U.S. relationship goes sideways.
He spoke to German Chancellor Olaf Scholz last week about deepening economic ties "in the current global trade context."
Carney was also on the phone with British Prime Minister Keir Starmer Sunday night and the two discussed, according to a U.K. readout of the call, how "an all-out trade war is in no one's interest."
There has been some trade tensions between Canada and the U.K. in recent years but the two leaders discussed drawing closer economically as they both stare down a protectionist U.S. president.
Poilievre is pitching similar measures — supports for workers and businesses, reduced RRIF withdrawal requirements and a plan to turbocharge economic development by fast-tracking energy projects.
"We have to acknowledge this chaos is the direct result of wrongheaded, unnecessary, chaotic policies coming from President Trump," he said.
Poilievre said some elements of the British press have "condemned" Carney and his track record in the U.K. Carney has long been targeted by pro-Brexit voices who have accused him, a pro-Remain figure, of sabotaging the effort.
The former British Conservative chancellor who hired Carney for the central banker job has said the Canadian was "the best person in the world for the job."
In an interview, Robert Kavcic, a senior economist at BMO Capital Markets, said Trump's high tariffs are "the worst-case scenario," and it will be difficult for Canada to navigate through this trade uncertainty in the coming months.
Trump's tariffs will likely torpedo U.S. economic growth while at the same time spiking the prices of some goods, he said — the conditions for another episode of "stagflation."
Kavcic agreed with Carney that the U.S. could tip into a recession this year.
Given Canada is so tied to the U.S., there could be knock-on effects in this country as a result, he said.
"It's going to be tough for Canada to get out of this without one or two quarters of negative economic growth," he said. "We're going to be flirting with a recession-like environment later this year."
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