MNI: Canada Says CAD95B Debt Option Prudent In Trade Fight

Canada's Finance Minister Francois-Philippe Champagne said Thursday the CAD95 billion borrowing option cabinet approved earlier this year-- which could be larger than any annual deficit outside the pandemic -- is a prudent defense in the U.S. trade dispute.

“We’ve always been clear since day one that we want to have no tariffs, and we are fighting for Canadian workers,” Champagne said in response to a question from MNI before a cabinet meeting. 

“We have a number of tools in the toolbox, you know, and Canadians expected us when we started that was to fight for them but at the same time be prudent when it comes to looking at what we might be able to do to support industry,” he said. “You’ve seen that we are now affected by unfair steel and aluminum tariffs.” 

Cabinet in late March approved the "contingency margin" because of geopolitical risks and officials discussed how it might be used, according to a briefing document obtained by MNI. The memo was dated after Mark Carney took over as prime minister from Justin Trudeau on March 14, pledging an "elbows up" stance against Donald Trump's threats of using economic force to make Canada the 51st State. (See: MNI: Canada Approved CAD95B Geopolitical Contingency Borrowing)

Earlier this week Carney and Trump at a G7 summit in Alberta agreed to create a trade framework in the next 30 days, though Trump said he still prefers tariffs.

Canada has deferred a budget until the fall and Parliament's budget officer earlier this week said the deficit may be as high as CAD70 billion in the fiscal year that started April 1, higher than the Liberal Party platform.