Trump Tariffs Archives - Centre for Future Work

How Canada is Surviving Trump’s Trade War

Jim Stanford — Wed, 30 Sep 2026 04:49:11 +0000

Centre for Future Work Economist and Director Jim Stanford was recently invited to give testimony to the Senate’s National Finance committee, regarding the state of Canada’s macroeconomy in the wake of Donald Trump’s trade war and other geopolitical uncertainty. Stanford emphasized the continuing resilience of the national economy, which has avoided recession and recently chalked up decent growth and job-creation numbers – despite the damage done by U.S. tariffs to our exports and business investment. He warned Senators that diversifying the destination for Canadian exports is not an adequate response to current risks: Canada must also focus on diversifying the composition of exports, using pro-active measures to add value to Canadian resources through processing and manufacturing (rather than depending mostly on exports of unprocessed resources, which now account for over 50% of total Canadian merchandise exports). He also stressed that the challenge of the trade war does not justify jettisoning core labour, social, and environmental criteria in economic development policies. Stanford specifically criticized the federal government’s intention (in its Bill C-39) to codify ministerial powers to ban strikes in the federal sector of the economy, on vague and subjective grounds of ‘national interest’.

Stanford’s opening remarks to the Senate committee are posted below. They draw on more extensive analysis contained in several recent public presentations; see Stanford’s presentation slides here for more detail.

Opening Remarks

Senate Standing Committee on National Finance

Hearings on Canadian Economic Outlook, Sep. 29, 2026

By Jim Stanford, Economist and Director

Centre for Future Work

Thank you very much, Senators, for the opportunity to meet and share my views on Canada’s economic and fiscal situation as you prepare for the upcoming federal budget.

The Centre for Future Work is a labour economics research institute, founded in Canada in 2020. We conduct research on the full range of economic issues facing working people: including the future of jobs, wages and income distribution, skills and training, sector and industry policies, globalization, the role of government, public services, and more. The Centre also develops timely and practical policy proposals to help make the world of work better for working people and their families. The Centre is independent and non-partisan.

Today I will provide some short comments on the current state of Canada’s economy, how it is withstanding the uncertainty caused by the erratic changes in U.S. trade policy, and themes that the federal government should emphasize in its future actions. Then I will welcome your questions and comments.

Recent economic indicators confirm that Canada’s economy is maintaining its stability and momentum despite the disruptions arising from U.S. tariffs and other uncertainty on the international front. Second-quarter growth was both strong and well-balanced. All major cylinders in Canada’s economic engine were firing: with significant growth in consumer spending, government expenditure (on both current services and capital investment), business non-residential investment, residential investment, and exports. Even our exports to the U.S. grew, as well as our exports to other countries. The overall rate of growth (2.3% annualized) would have been much stronger but for a major inventory drawdown during the quarter, as businesses worked down excess inventory accumulated in previous less vibrant quarters. That portends continued strength in future quarters, as firms adjust to renewed growth and readjust their inventories accordingly.

In the labour market, job-creation has been decent if not spectacular, with over 200,000 jobs created in the last 12 months, most of them full-time. Even manufacturing (which has borne the brunt of U.S. trade actions) has seen year-over-year job growth of over 20,000 new positions, which attests to the diversity and resilience of this vital sector. Ironically, the weakest employment numbers are presently arising from the public sector, including education (mostly due to job reductions in colleges, adjusting to the whiplash effects of erratic immigration policies for international students) and public administration (mostly due to headcount reductions in the federal civil service). This public sector downsizing is unnecessary. The public sector is relatively insulated from President Trump’s trade actions, and should be a source of stability as the economy adjusts to the new global environment. The federal government in particular should rethink this downsizing, which will also affect the quality of federal service delivery to Canadians.

One warning sign from the labour market is a noted deceleration of wage growth, which had been quite robust over the previous four years. The initial inflation shock following the COVID pandemic required a pickup in wage growth in Canada, to try to restore real purchasing power for Canadian workers damaged by the temporarily high inflation of 2022 and 2023. That repair job worked: wage growth exceeded inflation significantly from late 2023 until the present, allowing real wages to recover and then some. Real wages are now higher than they were before the pandemic, and this has been essential in helping Canadian address affordability challenges. It is testament to Canada’s labour relations system that real wages, on average, have been more than fully repaired. Strong improvements in minimum wages in most provinces (and the federal jurisdiction), and Canada’s strong collective bargaining system, explain why real wages have performed better here than in many other countries – including the U.S., where real wages are falling.

However, a combination of slower wage growth and a rebound in inflation (resulting from the U.S. war against Iran) are now threatening that success. Hourly nominal wages were up only 2.0% year-over-year in August, the slowest in 5 years – and not enough to keep up with current inflation. Placing continued priority on strong wage gains for Canadian workers will be essential for protecting purchasing power and sustaining consumer spending, which after all accounts for half of total GDP. In this context, I must express alarm regarding the federal government’s intention to codify restrictions on normal collective bargaining rights in its proposed changes to the Canada Labour Code, as part of its current Bill C-39. Codifying the government’s right to interfere arbitrarily in bargaining and suppress constitutional rights (including the right to withhold labour) on the basis of vague and subjective measures of ‘national interest’, is a step in the wrong direction, that would heighten the risk of future deterioration in real wages in Canada.

Canada’s trade performance has also been surprisingly robust despite the impact of swings in U.S. policy. Exports of goods and services in nominal terms have increased to both the U.S. and other countries, partly due to higher prices (especially for oil) and partly increased volumes. Since the end of 2024 (when President Trump won election), Canada’s exports to countries other than the U.S. have grown by 18% (to the second quarter of 2026). Even our exports to the U.S. are up 9%. The share of our total exports going to the U.S. has fallen to 67%. There is a lot going on behind these numbers (including the rise in world petroleum prices following the U.S. war on Iran), but it seems clear that efforts to diversify Canadian trade ties are paying off.

Let me conclude with some high-level thoughts about the broad task facing Canada’s economy in the coming years. The attacks on our economy, and indeed our sovereignty, from south of the border are forcing us to redefine how we orient Canada’s economic and social development. Instead of relying on access to the huge U.S. market as our key advantage in investment location, we must develop a more self-reliant and diversified vision for future investment, innovation, trade, and growth. This means attracting more investment here (from both foreign investors, but also more investment of our own capital, such as the trillions held by Canadian entities, including our pension funds, in the U.S. and other foreign markets). It means strengthening our trade ties with the rest of the world. But it’s not just the quantity of investment and exports that matters: it’s also the composition of those flows, and the quality of the economy – and society – that we build. There is a current temptation, as we gird our national loins to withstand the irrationality of the Trump administration, to double down on anything we can do, and do quickly. This has contributed to a great rush to expand resource extraction and exports.

However, reinforcing Canada’s dependence on extraction and export of unprocessed primary products has its own risks to our economic capability and sovereignty – including well-known vulnerability to global demand and geopolitical swings, as well as (in the case of fossil fuels) environmental risks that are more urgent every year (and which continue to accumulate regardless of the climate denialism of the U.S. government and some others). Our vision should be to build an economy that is not just viable in the face of Trump’s attacks, but retains the core values which motivate Canadians to defend our country as an entity distinct from that south of the border. That means preserving a balance in our economic strategy between getting big things done quickly, and making sure we are doing the right kinds of big things, and doing them properly – including with due attention to sustainability, Indigenous consultation and consent, and basic social and labour values and rights. In that regard, it is more important than ever for Senators to play their full oversight role, to ensure that the federal government’s response to this dangerous moment does not dismiss those values and priorities in a rush to sign deals and accelerate projects.

Thank you again for your attention, and I look forward to your questions or discussion.

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B.C. Missed an Economic Opportunity by Importing New Ferries From China, Rather than Building them Here

Jim Stanford — Sat, 19 Sep 2026 01:19:14 +0000

BC Ferries recently announced a purchase of four major new vessels from a shipyard in China. This decision has sparked criticism from trade unions and others, who argue the ferries should have been commissioned from domestic shipyards.

New research from the Centre for Future Work confirms that the decision to import the ferries, rather than domestic procurement, imposed a significant foregone economic cost on the province.

Sourcing an equivalent value of shipbuilding from domestic yards would generate $1.5 billion in additional GDP in Canada (85% of that in B.C.), over 10,000 person-years of employment, and would return over $400 million in additional revenue to government coffers (providing a financial basis for public support for future procurement).

The report reviewed the current scale of shipbuilding in B.C. and Canada, highlighting the strong employment growth in the sector over the past 15 years (largely due to a pro-active procurement strategy for Navy and Coast Guard ships from the federal government). It reviewed the role of active industrial policy in supporting shipbuilding in other major producers – including the U.S., China, and Europe.

It also surveyed the current capabilities of B.C.’s shipbuilding sector, identifying gaps that should be addressed in order to ensure the industry can source future ferry procurement from the provincial ferry operator.

The report concluded with several recommendations, including:

Establish a Ministerial-level task force to coordinate the development and implementation of a robust provincial shipbuilding strategy.
Amend contractual and fiscal arrangements with BC Ferries to require the firm to maximize economic benefits from domestic procurement of future vessels.
Commitment to accelerate the electrification of ferries, and development of B.C. technological and industrial expertise in electric vessels.
Formation of a consortium of firms to organize and plan the expansion of future shipbuilding capacity in B.C.
The provincial government should be prepared to take equity stakes in future ventures.

A strong marine sector workforce development strategy to ensure a steady and adequate supply of skilled workers for the shipbuilding and marine sectors.

Please see the full report, The Economic Benefits of Ferry Construction in B.C., by Jim Stanford, Blair Redlin, and David Fairey.

A video reviewing the main findings of the report, recorded during a public launch event, is available on the Centre for Future Work’s YouTube channel.

The report generated numerous media articles, including:

Newspaper articles in the Vancouver Sun, the Toronto Star, and numerous other outlets.
Television coverage on CHEK TV and other stations.
A feature interview on the Jas Johal Show on CKNW Radio.

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Trump Launches New Attack Against Canada’s Currency

Jim Stanford — Fri, 11 Sep 2026 18:37:01 +0000

U.S. President Donald Trump has opened another front in his trade war against Canada, suggesting that Canada is taking advantage of the U.S. through its currency. Both currencies are called the dollar, but Canada’s trades for less than the U.S. currency, and Trump argues this creates an unfair advantage.

More than 25 countries in the world have a currency called “the dollar”. Apparently, according to Donald Trump, 24 of them must be taking advantage of America because their dollars are different from his.

Canada has had a flexible exchange rate since 1970 (and also had a flexible rate between 1950 and 1962). It was one of the first industrial countries to abandon fixed exchange rates as the Bretton Woods financial system was dismantled in the early 1970s. The exchange rate is determined by numerous factors, including financial capital flows, comparative interest rates, comparative inflation, and investor expectations. The present exchange rate (about 72 cents U.S.) is well within the range of its historical fluctuations, and is in fact slightly stronger than when Trump took office for the second time in January 2025.

Of course, the fact that America’s dollar is used (for now, anyway) as a global reserve currency, hence allowing the US to run trade deficits every year for 50 years, is a unique privilege, not a sign of victimisation. America consumes far more than it produces, year after year. But inflows of capital from other countries, and holdings of U.S. dollars by foreign investors and institutions, allow the U.S. to maintain this ongoing trade deficit.

The world (including Canada) supplies the US with trillions of dollars of purchasing power every year, allowing this permanent trade deficit to continue. We explained this relationship in our research report, Who’s Subsidizing Whom? Over the past decade, new purchases of U.S. debt (mostly from the federal government) have almost perfectly offset the cumulative U.S. bilateral trade deficit with Canada over that same period. In short, it is Canada subsidizing America (with transfers of money), not the other way around.

Centre for Future Work Director Jim Stanford commented on Trump’s arguments about the currency on Global News’ national television broadcast.

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Canada-U.S. Employment Contrast Shows Trump’s Tariffs are not Working

James — Mon, 10 Aug 2026 18:32:14 +0000

On August 7 both Statistics Canada and the U.S. Bureau of Labor Statistics released their monthly labour force reports (for July). The stark contrast in the two trends certainly strengthens Canada’s hand in ongoing trade talks with Trump. Canada created 75,000 jobs in July. The U.S. lost 23,000 jobs by one measure (the payroll survey of employers), 87,000 by another (the household survey of workers).

But the longer-term trends also refute Trump’s chaotic economic and geopolitical policies. Since January 2025 (his second inauguration), US employment has declined by 1.0% (by the household survey), the unemployment rate has grown, and the participation rate (which has been much lower than Canada’s for years) has fallen much more.

In Canada, employment rose 1% in the same time, the unemployment rate fell, and the participation rate (which reflects both demographic and cyclical factors) declined 0.4 percentage points (one third as much as in the US). Even in manufacturing, the target for Trump’s tariffs, the US has lost more jobs than Canada since Trump returned to office. This is also true in the high-profile auto sector, which Trump claims should completely relocate to the US: it is losing jobs much faster in the US than in Canada.

Real wages are growing in Canada, but falling in the US. This reflects both strong wage growth here, and slower inflation.

Trump’s policies were never about protecting American workers. They are about weaponizing popular discontent and misdirecting it against foreigners—rather than against the billionaires whose interests he promotes. The longer he’s in power, the weaker the US economy becomes, the worse off are American workers, and the more dismal do his mid-term prospects appear.

Also, the worse the US economy gets, the weaker is Trump’s bargaining position in trade talks (including with Canada and Mexico). With Republicans down badly in the polls as mid-term elections approach, Trump’s tariff war is losing credibility at home quickly.

In short, Trump’s pledge to use “economic force” to annex Canada is backfiring badly. Labour market trends show both that Canada’s economy is more resilient than most expected, but also that Trump’s bargaining position will weaken as more US jobs are lost to his misguided tariffs.

Centre for Future Work Director Jim Stanford discussed the July employment numbers, and the contrast between Canada and the U.S., on CBC News Network with host Lien Yeung.

One nerdy data note: The US releases its payroll and household surveys the same day. The series differ for various reasons, such as self-employment & agriculture (not counted in the payroll data), and multiple job-holding (which inflates payroll employment). US household data has been weaker than payroll data under Trump’s second term, in part because it does count agricultural employment (which has been hurt badly by Trump’s repressive immigration policies).

Canada’s payroll data (from the SEPH series) comes out a few weeks later than the household survey data discussed above, so we can’t make a direct Canada-US comparison for payroll employment in July yet. For May (the most recent Canadian payroll data), Canadian payroll employment was up 0.5% from January 2025, vs a 0.4% increase in the US (both seasonally adjusted). That gap will have widened since May, which will be confirmed when the July data comes out for Canada.

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Trump Hits Canada and Others With Still More Tariffs

Jim Stanford — Tue, 28 Jul 2026 04:43:46 +0000

As negotiations among the U.S., Canada, and Mexico continue over the review and renewal of the Canada-U.S.-Mexico Agreement (CUSMA), U.S. President Donald Trump has ratcheted up his aggressive tariff threats against Canada and other countries. This follows his usual ‘Art of the Deal’ strategy, which is to create chaos, threaten harm, extract concessions (often marginal), and then claim historic victory.

Two sets of new tariffs have been announced in the last week:

Under Section 338 of U.S. trade law, Trump announced punitive 50% tariffs against over 500 different products from Canada, supposedly in response to ‘discriminatory’ treatment of U.S.-made autos, liquor, and dairy products. His complaints about discriminatory treatment are laughable, since these so-called ‘irritants’ were counter-measures imposed against Trump’s unilateral escalation of tariffs against Canada last year. The tariffs will come into effect August 19, unless some new trade deal between the two countries is reached by then. The products covered by these tariffs constitute about 4-5% of Canada’s exports to the U.S., and there will be no exemption for products qualifying under the existing CUSMA. This will cause an incremental increase in overall weighted-average tariffs on Canadian products. The regional impact of the tariffs is quite diverse: exports from B.C., Ontario,, and Quebec are hit hardest, while exports from Alberta, Saskatchewan, and Newfoundland & Labrador (concentrated in energy and potash, two products which the U.S. desperately needs). Given U.S. interference in the debate over Alberta separatism, many analysts suspect this regional differentiation is quite deliberate, intended to further inflame tensions between the provinces in how to respond to the U.S. attacks.
Days later, under Section 301 of U.S. trade law, Trump announced new across-the-board tariffs against some 80 countries, including Canada and all other top U.S. trading partners, supposedly to combat the use of forced labour in production of traded products. The affected countries supposedly have not taken adequate measures to prevent use of products made with forced labour in their own supply chains, thus indirectly facilitating the continuation of forced labour. Coming from the country which has by far the weakest protections for labour standards (including the use of prison labour in for-profit companies), this is not believable. In reality, Trump seized on this measure to justify reimposition of the across-the-board ‘Liberation Day’ tariffs that were struck down by the U.S. Supreme Court earlier this year.

In online commentary, Centre for Future Work Director Jim Stanford highlighted the hypocrisy of the U.S. invoking fake concern over labour freedoms to justify these new Section 301 trade attacks:

“The U.S. uses prison labour (incl. for private firms) more than any other country, hasn’t raised its min. wage ($7.25/hr) since 2009, and violates dozens of international labour standards every day. So Trump’s new Section 301 tariffs have nothing to do with concern for labour. They are a laughably transparent effort to replace the Liberation Day tariffs struck down by his own (stacked ) Supreme Court. They apply to all of the U.S.’s top trading partners–INCLUDING those who signed ‘deals’ with him, and those with whom the U.S. runs trade SURPLUSES. So if misery loves company, Canada should feel better. These new tariffs will hurt other U.S. trading partners as badly as the new Section 338 tariffs he announced this week will hurt Canada. But the biggest loser from this entire clown show is the U.S. Inflation, manufacturing job loss, declining real incomes, and general uncertainty will get worse. His war in the Persian Gulf is still going badly. And his mid-term prospects are grimmer than ever (hence his trying to rekindle trade wars).”

Stanford also appeared on CBC News Network’s show Ian Hanomansing Tonight to discuss the new tariffs, and how Canada should respond. He pointed out that at least 80 of the products targeted by Trump’s new Section 388 tariffs against Canada are items that Canada does not export to the U.S. They are thus ‘tariffs on nothing’, reinforcing that the threats are mostly about the theatre of negotiations more than any genuine economic goals. These ‘tariffs on nothing’ are the equivalent for Canada of the ridiculous ‘Liberation Day’ tariffs that Trump imposed in April 2025 on over 100 countries around the world – including uninhabited Antarctic islands!

Stanford also warned that even if Canada reaches a new trade deal with the U.S., we can have no confidence that he would live up to its terms. After all, many of the so-called ‘deals’ which Trump reached with various countries in the last year have been reneged on, or superseded by his new tariffs (such as the new Section 301 tariffs, which apply to all top trading partners of the U.S. – including those, like Australia, with which the U.S. runs trade surpluses). The CUSMA itself we negotiated by Trump himself during his first term, and lauded by him at the time as the greatest trade deal in history, yet he has violated its terms without hesitation in his second term. And U.S. demands to rewrite the contractual terms of the Gordie Howe Bridge (paid for my Canada under an agreement with the U.S. signed ) is further proof that any ‘deal’ with the U.S. is very fragile.

Given the unreliability of U.S. commitments on any trade issue, therefore, it is all the more important for Canadian negotiators to proceed with caution in negotiations around a revised trade deal. Complaints that Canada has not reached a quick deal with the U.S. are misplaced. Other countries which hoped they could avoid the impacts of Trump’s tariffs by giving up concessions in a ‘deal’ (like the EU, Japan, the UK, or India) have been victimized by subsequent U.S. trade actions as badly (or worse) than Canada. As our Centre argued a year ago (in the research paper, A Bad Deal with Trump is Worse then No Deal at All), Canada’s negotiators need to hold firm on the requirement that U.S. tariffs (especially the targeted sectoral tariffs that are traumatizing key industries like auto, steel, and forestry) are removed as part of any comprehensive deal.

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Auto Talks a Chance to Reinforce the Canadian Industry’s Lasting Potential

Jim Stanford — Tue, 30 Jun 2026 01:54:13 +0000

As Canada’s auto industry grapples with the fallout from Donald Trump’s erratic and mutually-damaging tariffs, the union representing auto workers has opened its triennial round of major bargaining with the major North American automakers. First up will be talks with Ford, which has invested $5 billion in its Canadian operations despite the tariffs. In this commentary, originally published in the Toronto Star, Centre for Future Work Director Jim Stanford discusses the importance of this bargaining in enhancing stability for both workers and the automakers, and showcasing the advantages of Canadian auto manufacturing – advantages which, he argues, will outlast Trump.

Despite Trump tariffs, Unifor talks with Ford the perfect moment to showcase Canada’s auto sector

By Jim Stanford

Canada’s auto industry is reeling from Donald Trump’s trade war. His 25% tariff on vehicles and some auto parts had immediate impact on Canadian vehicle production, employment, and exports, which all slumped badly after he imposed it last year.

But the longer-run threat facing auto is even worse. The tariff destroys the business case for making cars in Canada, given that 90 percent of our output goes to the U.S. – a geographic reality that has been true since the 1960s.

And that is exactly Donald Trump’s goal. He wants all North American production to relocate to the U.S. His Commerce Secretary Howard Lutnick put it bluntly: “Car assembly is going to be in America and there is nothing Canada can do about it.” Last month U.S. Trade Representative Jamieson Greer echoed that view, asking “Why do we make cars in Canada?”

Into this turbulent arena marched two negotiating teams last week: bargainers for Unifor, the auto union, and Ford Motor Company. The two sides kicked off triennial contract talks in Toronto, hoping to reach a new collective agreement for Ford’s 5000 Canadian workers by a July 10 deadline.

One might think this is a terrible time to negotiate a labour contract – with many workers on layoff, and uncertainty hanging thick. But given the unfortunate reality of Trump’s tariffs, stakeholders must deal with the world as it is, not how they wish it was.

In fact, these talks are an opportunity to remind businesses and governments on both sides of the border why Canada is a great place to build cars.

Both the union and the company emphasized these negotiations as an opportunity to impart some badly-needed stability to an industry beset by Trump-induced chaos. The union, of course, puts priority on job security for its members at Ford’s operations: the Oakville assembly plant, two major engine factories in Windsor, and three parts distribution centres.

But the company needs stability, too. The Oakville plant is launching a new generation of pickup trucks. This represents a massive investment by Ford, which has pumped $5 billion of capital into Canadian plants despite Trump’s actions.

Any vehicle launch is a complex, sensitive moment for an assembly plant. But the Oakville launch is particularly fine-tuned: the company will produce several specialized variants of large trucks on the same assembly line.

Ford is also launching a new high-feature engine at its Essex plant in Windsor. These two simultaneous product launches underscore the value to Ford of a smooth round of bargaining.

That the two sides have set an internal bargaining deadline two months before the current contract expires (when a strike or lockout would become legal) is a clear indication they aim to reach agreement without a work stoppage, if possible.

The intricate cross-border nature of Ford’s supply chain serves as a parable for the whole industry. Ford’s Canadian-built engines flow to 12 different U.S. and Mexican assembly plants (as well as Oakville). And its Oakville trucks encompass hundreds of different parts made across the U.S. and Mexico. A disruption in any of those cross-border flows (whether from a tariff or anything else) hurts everyone.

That’s why the automakers themselves are dead-set against Trump’s destructive strategy: it’s cost them billions in needless costs, lost efficiency, and supply-chain uncertainty.

Despite recent tribulations, auto is still Canada’s most important manufacturing sector. 120,000 Canadians are directly employed in auto and parts production – and that many again in the upstream supply chain that feeds auto plants with an incredible array of inputs, materials, machinery, and services.

These are high-productivity jobs, supporting good wages and benefits, and anchoring billions of dollars in GDP, downstream consumer spending, and government revenues. Canadian auto plants have higher productivity, better quality, and lower labour costs than in the U.S.

So to answer Greer’s insulting question, we make cars in Canada because we’re better at it than Americans. Not to mention because we spend $100 billion buying 2 million new cars every year, and hence deserve a fair share of the jobs that come with that demand.

A fair and productive round of bargaining, nailing down new investment and securing jobs, would be a powerful and tangible demonstration that this industry is here to stay – long after Trump is gone.

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Senate Testimony on the Canadian Economic Outlook

Jim Stanford — Tue, 16 Jun 2026 18:21:12 +0000

Centre for Future Work Economist and Director Jim Stanford was recently invited to testify before the Senate of Canada’s National Finance committee, regarding the economic and fiscal outlook for the country. The testimony was part of the committee’s hearings regarding certain aspects of budget implementation (including measures announced in the recent Spring Economics and Fiscal Update).

Below are Stanford’s opening remarks. He touched on several issues, including the need to diversify the product composition of Canada’s exports in the wake of Donald Trump’s tariffs, issues related to the proposed new Sovereign Wealth Fund announced by Prime Minister Carney, and the macroeconomic and distributional impacts of the latest spike in global oil prices (resulting from the U.S. attacks on Iran). Questions to Stanford from committee members included the sovereign wealth fund, the risks of privatizing airports and other public assets, and the challenges facing the auto industry. A Hansard record of the full hearing is available here.

Opening Remarks Senate Standing Committee on National Finance Bill C-30 Hearings, May 27, 2026

By Jim Stanford, Economist and Director Centre for Future Work

Thank you very much, Senators, for the opportunity to meet and share my views on Canada’s economic and fiscal situation as you discuss issues related to the federal budget.

Today I will present short comments on three economic issues of relevance to implementation of measures announced in the spring fiscal update, and related processes:

Diversifying Trade, Composition as Well as Destination: Donald Trump’s tariff policies and other trade attacks have posed a historic threat to Canada’s export industries. Most vulnerable are the higher-tech value-added industries that have been deliberately targeted by his Section 232 sectoral tariffs: including auto, steel, aluminum, and forestry. Further sectoral tariffs are possible given other investigations he has launched, including on aerospace, industrial machinery, semiconductors, and pharmaceuticals. Diversifying the end destination of our exports is a logical response to this challenge, and the federal government has pursued several opportunities in this regard. But there is another, equally important priority that must also be kept in mind as we traverse this challenge: diversifying the composition of our exports. In other words, what we sell is just as important as where we sell it. Canada has had some initial success in growing exports to other markets. By the fourth quarter of 2025, only two-thirds of our merchandise exports were to the U.S., down from three-quarters only a few years ago. That progress is fragile, however, dependent on cyclically high prices for gold, oil, and some other resource projects. At the same time, Canada’s dependence on exports of unprocessed or barely processed resource products – or ‘staples’, as they are often known in Canadian economic history – has been growing. Basic resources accounted for half of Canada’s merchandise exports last year, up from one-fifth at the turn of the century. Revering to a pure resource supplier – a ‘hewer of wood, drawer of water’ in the classic phrase – will not protect Canada’s economic sovereignty. We must preserve the capability to produce a full range of goods and services, including higher-technology value-added products. This goal should be front and centre in Canada’s emerging industrial policy strategy for responding to the threat from the U.S.

Sovereign Wealth and the Public Interest: Concurrent with the spring fiscal update, Prime Minister Carney recently announced his government’s intention to create a new sovereign wealth fund, that would invest in various projects with the intent of stimulating desired new economic activity, strengthening the structure of Canada’s economy, and accumulating public wealth over time. This is an interesting proposal with both opportunities and risks. Successful examples of sovereign wealth funds exist around the world. In general, the goal is not solely to accumulate and invest budgetary surpluses; most sovereign funds have a mandate to wield public capital in the interests of economic diversification or the qualitative development of the domestic economy. On that score, the fact that Canada’s fund is likely to be initially endowed with borrowed funds (rather than accumulated budget surpluses, which do not exist right now at the federal level) is not the critical issue. However, it will be important to correctly specify the mandate and governance structure of the new fund. In my judgment, the goal should be to foster investment and growth in strategic value-added industries that add to the breadth of capabilities of the Canadian economy, and help to address the composition challenge I mentioned above. I am worried by Mr. Carney’s reference to ‘asset recycling’ in his initial discussion of the idea, through which the government would potentially sell of existing public assets (reportedly including airports and ports) in order to subsidize other projects. This is a dangerous model that risks undermining the public interest in continued ownership of those vital assets. The goal is not to ‘recycle’ public wealth, but to build it over time (and enhance our economic capacities in so doing), and the new sovereign fund should be structured and managed with those public interests as its top priority.

The Latest Oil Price Shock: An already uncertain macroeconomic environment has been further disrupted by Donald Trump’s attack on Iran, the resulting closure of the Strait of Hormuz, and a global shock in oil prices. This will have negative effects on Canada, even though we are a major net exporter of oil and import virtually no oil from the Persian Gulf. Our Centre recently published a report estimating the impact of this oil shock on consumer costs and future inflation, based in part on the documented experience of the last oil shock (in 2022, after the Russian invasion of Ukraine). We considered three broad scenarios: one in which the Strait reopens immediately, one in which it remains closed for three more months, and one in which it remains closed for six more months. In any of these cases, supply disruptions and high prices will last for months after the Strait reopens, due to delays in loading and transporting shipments from the Persian Gulf, damage to export infrastructure from the war, and lasting shifts in expectations and risk premiums built into world prices. Even with immediate reopening, Canadian consumers would pay an additional $50 billion in direct and indirect costs over a 12-month period starting with the outbreak of the war at the end of February. The inflation rate would rise above 4 percent. If the Strait remains closed for longer, those costs escalate, and inflation could rise to 6 percent or higher. In turn, that will lead to higher interest rates and slower growth – on top of the existing weakness in Canada’s economy from the trade war. This disruption is the last thing Canada needs right now, and in my view it highlights important policy considerations. Having core energy prices in Canada set on the basis of volatile fluctuations in global futures markets, with no connection to Canadian production, supply, and demand conditions, exposes us to unnecessary risks. We should have a conversation in Canada about other ways to manage petroleum prices (noting that we already regulate electricity prices and gas distribution charges, which have remained stable despite the global oil chaos), and other ways to manage inflation (rather than relying solely on across-the-board interest rate hikes to suppress inflation of any kind, no matter its cause). I would also support fiscal measures to redistribute some of the record revenues that are now flowing to the petroleum industry as a result of this latest price shock – and which partly reflect excess costs paid by Canadian consumers. An excess profit tax, modeled on the one applied to Canadian banks and insurance companies during the pandemic, could recapture some of that revenue windfall, and use it to finance rebates to Canadian consumers and investments in renewable energy infrastructure (which are ultimately the best way to disengage from the volatility of world oil fluctuations). Bill C-30 includes measures to reduce federal excise taxes on gasoline and diesel in response to this price shock; asking the petroleum industry to contribute to the cost of that relief seems both fair and efficient. The full report which I reference, titled ‘A Sequel We Don’t Want: What the 2026 Oil Price Shock Will Cost Canadians,’ is available at www.centreforfuturework.ca.

Thank you again for your attention, and I look forward to any questions or discussion.

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Stellantis Shows Canada’s Industrial Economy is On the Line

Jim Stanford — Tue, 21 Oct 2025 17:50:08 +0000

Automaker Stellantis recently announced it would shift production of a new vehicle from an assembly plant in Brampton, Ontario (which has been closed for re-tooling) to Indiana, in order to escape the effects of Donald Trump’s 25% tariff on Canadian-assembled vehicles. This decision seems to confirm the worst fears of Canadian economists regarding the long-run impact of Trump’s trade war: by weaponizing access to the U.S. market and pressuring global companies to relocate long-run investments to the U.S., Trump would shatter the viability of continued production in Canada and other countries.

In this commentary, originally published in the Toronto Star, Centre for Future Work Economist and Director Jim Stanford highlights the dangers of this decision – not just for the automotive sector, but for all other high-tech industries targeted by Trump’s Section 232 “national security” tariffs. But he also reminds us that Canada is not powerless in this confrontation: Canada’s large and lucrative new vehicle market gives the government great leverage to pressure Stellantis (and other companies) to maintain a proportional footprint in this country.

Here’s how we fight back against the sheer gall of Stellantis’ caving to Trump

By Jim Stanford

As the saying goes, when someone tells you who they are, you should believe them. And where cars are concerned, Donald Trump has been telling us exactly who he is.

He warned in April, “We don’t really want Canada to make cars for us.” Commerce Secretary Howard Luttnick recently confirmed this goal, telling a Canadian audience “car assembly is going to be in America, and there is nothing Canada can do about it.”

So we shouldn’t be surprised that automaker Stellantis is shifting planned production of a new Jeep from its plant in Brampton, to Illinois. This is Trump’s precise goal: weaponize access to the U.S. market, to leverage incoming investment from global companies in strategic, high-tech industries.

Nevertheless, the sheer gall of Stellantis’ action is shocking. It is breaking explicit commitments made to all its key partners: its own workers (in a binding labour contract), the federal and provincial governments (in binding covenants attached to various subsidies), and auto parts companies (which invested hundreds of millions in new tooling and capital for Brampton).

Trump’s 25% tariffs on cars are already exacting a painful toll. Vehicle exports to the U.S. are down 15% year-over-year since they came into effect; that will translate (if sustained) into a $7 billion annual loss. Trump is now implementing a 25% tariff on heavy trucks that will add to the pain.

But the biggest danger to Canada’s auto industry still lies ahead. If corporations respond to Trump’s extortion by shifting long-run investment to the U.S., Canada’s industrial capacity will be destroyed.

That’s why the Stellantis decision cannot stand. It would set a precedent that quickly spreads into all other high-tech industries.

Remember, while the auto industry has high symbolic value, Trump has his trade guns trained on the whole portfolio of Canadian high-tech industries. His tariffs fall into two broad categories.

First, there is a broad across-the-board tariff. But for now, most industries are exempt if they meet existing rules under the Canada-U.S.-Mexico Agreement (CUSMA). Most of those exempted products are resource-based commodities (energy, minerals, other raw materials) that Trump knows are essential to U.S. supply chains.

For a second category of industries, Trump is attacking full force. He is mis-using Section 232 powers under the U.S. Trade Expansion Act that allow him to unilaterally impose tariffs on grounds of “national security.” His claim these imports jeopardize U.S. security is bogus. His true goal is to force global companies in strategic industries to relocate to America.

It’s no coincidence these 232 tariffs are aimed at every one of Canada’s high-tech success stories: auto, trucks, steel and other basic metals, soon to be joined by aerospace, pharmaceuticals, semiconductors, industrial machinery, and more.

Stellantis’s decision is thus a dramatic opening battle in what will be a long, hard war to defend Canada’s status as a modern, industrial country. Yes, we will work to build new export markets, strengthen Canadian content in procurement, and expand trade within Canada. That is vital, and will take time.

In the meantime, we must at all costs defend the successful high-tech industries we have – every one of which is now in Trump’s crosshairs.

Ironically, Trump’s tariffs are clearly hurting U.S. manufacturing, not helping it. They increase input costs for U.S. factories, and create major uncertainty that holds back capital spending (notwithstanding photo-op announcements by obsequious CEOs).

U.S. manufacturing has contracted for seven consecutive months. As of August, the U.S. had lost almost 100,000 manufacturing jobs over the previous year. In contrast, Canada lost just 3,000 manufacturing jobs in the last year.

The major pain being experienced south of the border disproves the passive assumption that Canada has no leverage because of our smaller size. In reality, Canada is not small: we have the tenth largest economy in the world, with 42 million people, well-educated workers, natural riches, and a more stable democracy. The U.S. benefits from bilateral trade as much as we do.

In automotives, Canada has one of the largest and most lucrative vehicle markets in the world. We buy almost 2 million new vehicles per year, worth over $100 billion. Stellantis, and all other automakers, want a piece of it.

Last year Stellantis sold 130,000 new vehicles here – most imported, most of those from the U.S. At present Stellantis mostly avoids Canada’s 25% counter-tariff on vehicle imports from the U.S., thanks to a clever Canadian duty remission program.

And Stellantis benefits from other public supports, including subsidies for retooling that Brampton plant, and ongoing production credits for EV batteries from a new joint venture in Windsor.

All that support is contingent on Stellantis maintaining its production footprint here. It cannot be allowed to walk away from that commitment. The government must confront Stellantis with the full force of a sovereign, wealthy country.

Industry Minister Mélanie Joly has threatened legal action. That should just be the start. Ottawa should threaten full 25% tariffs on all Stellantis imports (costing $1.5 billion per year), until it recommits to completing the tooling at Brampton, paying interim income support to its workforce, and then fully utilizing the plant when it’s finished.

Pushing back against Stellantis will send a signal to companies in every other high-tech industry. If you want access to Canada’s market, Canada’s resources, and Canada’s supply chains, you must maintain a full-fledged production footprint here.

The Stellantis decision also highlights the failure of Ottawa’s strategy to appease Trump – with multiple concessions and personal flattery. While we talk nice, he races full-speed to steal as many high-tech high-wage jobs as he can.

Even worse would be a partial tariff deal that cements U.S. access to energy and other strategic inputs, while hanging our high-tech industries out to dry. By giving away our leverage without protecting our industrial jewels, that would be worse than no deal.

The Stellantis decision is a litmus test of our national courage. We have power to push back against this company, and against the autocrat it is catering to. If we don’t use it, we can expect many more companies to follow in Stellantis’ footsteps.

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This Is Not An Ordinary Federal Budget

James — Wed, 08 Oct 2025 18:13:27 +0000

As the federal government prepares to table its next budget on November 4, most of the public debate has centred on how big the deficit will be – as if that is the only metric of significance to Canadians. This is predictable and disappointing. At a moment when Canada as a country faces unprecedented challenges to our prosperity and sovereignty arising from Donald Trump’s trade war and other threats, a much more important question is how will the budget equip Canada to protect itself against Trump’s attacks, reorient away from so much dependence on the U.S. market, and invest in the things (including physical and social infrastructure) necessary to a self-reliant and sovereign economy. The single-minded focus on deficit reduction is driven primarily by those (like the corporate sector) with a vested interest in public sector austerity and tax cuts.

Centre for Future Work Director Jim Stanford appeared this week before the Senate’s National Finances committee pre-budget hearings. He tried to put deficit concerns in the context of the bigger challenges facing Canada, debunking false claims (including those from the interim Parliamentary Budget Officer) that Canada is standing on a fiscal “precipice.” Canada’s net federal debt (33% of GDP) is small by historical standards, small relative to other countries, and smaller than the private debts of Canadian businesses and households. Imposing needless austerity at this point would only worsen the more serious debt challenges facing businesses and families, and undermine an economy already staggering in the face of Trump’s trade war.

Here are Stanford’s opening remarks to the committee.

Opening Remarks

Senate Standing Committee on National Finance

Pre-Budget Hearings, October 7, 2025

By Jim Stanford, Economist and Director

Centre for Future Work

Thank you very much, Senators, for the opportunity to meet and share my views on Canada’s economic and fiscal situation in the lead-up to the upcoming federal budget.

Because of the unprecedented attacks on our prosperity and sovereignty from the Trump administration in the U.S., Canada’s economy is now at a historic juncture. This budget will be an important marker in our response to this challenge. It is not a normal budget, and it cannot be debated and analyzed through a normal lens.

Canada is in a struggle for our long-term viability as a distinct economic, democratic, and social entity. The pre-eminent importance of defending our country, protecting our industries, and sustaining our communities must shape the decisions made in this budget. The situation is not unlike a wartime budget – although I fervently hope it doesn’t come to that.

Government’s role is never to “balance its books”. Government’s role is to do whatever is necessary to protect its citizens – an imperative that is all the more urgent at a time like. This doesn’t mean that budget balances are irrelevant. Simply that they must be understood in context of the broader mission and responsibility of government.

Thank goodness Canada didn’t worry about balancing the budget during the Second World War. Thankfully, we are not in the same scenario today. But we nevertheless face a historic and overarching challenge to protect Canada, our economy, and our values. Debate over the upcoming budget must be framed in that context.

Predictably, most of the public discourse around the budget is focusing too narrowly on how big will the deficit be. This focus is unhelpful. The deficit will be significant, no doubt about it. And it should be.

Partly because Canada is on the verge of recession (if we are not already in one). Deficits are appropriate in that situation. But more importantly because of the enormous responsibilities government faces right now, which will clearly require deficit funding: including aid to export industries, investments in infrastructure, strengthening income supports (like EI) and public services for Canadians who need them, defense spending, and more. Those things have to be done. And as Keynes famously showed, if we can do something, we can afford it.

The federal government’s net financial debt as of June 30 this year was equivalent to 33% of GDP (Statistics Canada Table 38-10-0237-01). Its accumulated deficit (including actuarial liabilities) at end of fiscal 2024 equaled 42% of GDP (Finance Canada Fiscal Reference Tables, Table 2). Deficits are expected for the past and next fiscal years in the order of 2-3% of GDP.

Contrary to the exaggerated claims of some critics, this does not constitute an emergency in any way, shape or form. Indeed, given an appropriate macroeconomic context (with decent growth and moderate interest rates), deficits of that scale could be incurred every year, while maintaining stability in the debt-to-GDP ratio (which is a much more relevant measure of fiscal position than the size of the nominal deficit measured in billions of dollars).

Canada’s deficit and debt are small relative to other industrial countries. Many of those other countries face similar challenges to Canada – although Canada is more exposed to the consequences of Mr. Trump’s madness than almost any other country. So, if anything, our deficit should be bigger than those other countries, not smaller.

Government debt is smaller in relative terms than private debt in Canada. The debt of non-financial corporations equals 150% of GDP. The debt of Canadian households equals 175% of their disposable income. Businesses and households pay higher interest on their debt, have less capacity to manage the broader environment in which they operate, and are more financially precarious than governments (which cannot go bankrupt). Reducing the federal government’s debt by shifting a fiscal burden to households or businesses (through spending cuts) makes the overall debt situation worse, not better.

In this context, I feel it necessary to express my disappointment at the recent interventions from the interim Parliamentary Budget Officer, Mr. Jacques. His judgments that Canada stands “at the precipice” of fiscal crisis, and that the federal fiscal situation is “stupefying” and “shocking”, are economically and historically false, and frankly irresponsible. His mandate is to provide neutral information on budget issues to Parliamentarians, but both the content and the mode of delivery of his remarks have veered far into advocacy, and have done a disservice to informed policy discourse. He should correct those statements. They undermine the credibility of any future research his office produces.

I am very sympathetic to the concept, floated by the federal government, of treating investment and current spending separately in fiscal policy and planning. Of course, we already do that (with accrual accounting and depreciation methods). But a more explicit disaggregation of capital and current spending is helpful, in part so Canadians can better understand the purpose and value of public debt in the context of investment.

When debt is used to finance construction or acquisition of a productive asset, its impact on fiscal sustainability is quite neutral: entries appear on both sides of the balance sheet, and the gradual cost of future depreciation can be offset by proceeds generated by the productive asset.

However, this distinction between investing and saving is not justification for austerity in current program spending. To the contrary, treating public investment as a distinct pillar of fiscal policy provides more fiscal (and political) room for continued federal support for current programs, not less. There is no evidence by any relevant indicator (program spending relative to GDP, federal public sector employment as a share of employment, etc.) that current federal program spending is too high or needs to be cut back. Austerity imposed on current programs would impart a strong and needless contractionary drag on Canada’s economy at a moment when it is already struggling to maintain growth. As always, cutting back government spending in a time of macroeconomic weakness is self-defeating and destabilizing.

To sum up, buttressing Canada’s economy in the face of Mr. Trump’s trade war will require a combination of urgent measures, all of which will require more powerful and determined federal intervention:

- Supporting Canadian export industries to survive Trump’s tariffs, with emergency aid for firms and workers, and help with retooling and reorienting production and marketing away from the U.S.
- Investing in public energy, transportation, and social infrastructure to support industrial diversification, productivity growth, and quality of life.
- Supporting defense spending and other international engagements to strengthen relationships with other countries and promote international stability.
- Continuing to support current public programs, including provincial transfers for health care and education, and the new federal commitments for pharmacare and dental care.

These are historic priorities. The federal government has abundant fiscal capacity to fulfil its responsibility to lead Canada into a new chapter in its economic history.

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Bringing Capital Home Would Boost Canadian Growth, Reduce Trade Imbalance with U.S.

Jim Stanford — Sun, 28 Sep 2025 04:38:42 +0000

Donald Trump claims his aggressive trade actions are justified because of ‘unfair’ trade practices by other countries, that result in big U.S. trade deficits. But the real cause of those perpetual U.S. trade deficits is ongoing capital inflows to the U.S. from other countries – including Canada. In this commentary originally published in the Toronto Star, Centre for Future Work Director Jim Stanford shows that Canada is now a huge net lender to the U.S., with a positive foreign investment balance there of $1.6 trillion. Bringing some of that capital back to Canada would not only help to finance the major projects we are undertaking to protect our economy against Trump’s attacks, but they would also help reduce the U.S. trade deficit. Therefore, Donald Trump should thank us!

Let’s Help Donald Trump Reduce his Trade Deficit… by Bringing Our Capital Home

By Jim Stanford

Donald Trump justifies tariffs on Canada and other countries by pointing to the chronic U.S. trade deficit. Since the U.S. imports more from the rest of the world, than it exports, it has a trade deficit.

In 2024 that deficit equaled $917 billion (U.S.). That sounds like a lot, but equaled only 3% of U.S. GDP (smaller than previous years). Canada gets much of the blame in Trump’s rants. Yet we account for just 4% ($35 billion) of that total, tenth among U.S. trading partners.

Trump claims the deficit results from unfair treatment by the rest of the world. America can’t sell more abroad, he cries, because of obvious or hidden trade barriers. By imposing tariffs on all other countries (and even some uninhabited islands), and then using those tariffs to leverage other concessions, Trump predicts America will export more and import less. Voila, the deficit will disappear.

Economists of all stripes, however, ridicule this narrative. Trade deficits are affected by many factors, including differences in macroeconomic performance, changes in competitiveness, and exchange rate fluctuations. But the U.S. deficit is a chronic, structural feature: it has existed for 50 consecutive years.

That is only possible if a country continuously imports capital from the rest of the world, allowing it to pay for its trade deficit. And indeed, every year the U.S. takes in trillions of dollars of capital from other countries.

Those capital inflows come in all forms: loans, equities, derivatives, private equity, property, even cryptocurrency. They originate from many different actors: wealthy investors, investment funds, banks, central banks, and even foreign governments.

In total, those capital inflows are necessarily identical and opposite to America’s trade deficit. Indeed, by definition a country’s capital account (which measures net inflows and outflows of capital) must equal the opposite of its current account (consisting of the trade deficit and other current revenue flows).

America’s ability to attract foreign capital is usually seen as a strength, not a weakness. On average, U.S. investments are highly profitable (largely thanks to the very corporate-friendly structure of taxes, labour markets, and competition policy there). And U.S. assets, including the dollar itself, were long considered safe harbours in an uncertain and volatile financial world. (Under Trump, of course, that reputation is fading fast.)

Massive capital inflows give America (in aggregate) more money to spend in the world economy, than it earns. Far from “subsidizing” Canada and other countries through its trade deficit, it’s America that has its hand out.

So if Trump really wants to reduce the trade deficit, America must stop taking in so much capital from the rest of the world. Here’s where Canada comes in.

There’s been a historic but underappreciated change in our economic relationship with the U.S. over the last generation. We’ve gone from being dependent on incoming foreign investment from the U.S. (whether to build industries or finance deficits) to the opposite. We are now a huge net source of capital for the U.S.

Canada has an investment surplus with the U.S. of $1.6 trillion, or 50% of our GDP. The growth in our U.S. holdings over the last decade closely conforms to the cumulative U.S. trade deficit with Canada over the same time. America needs ‘handouts’ from the rest of the world to finance its perpetual trade deficit – and Canada has done our bit.

Our U.S. investments take all forms: individual holdings, mutual funds, pension funds. Shockingly, our own Canada Pension Plan has half its total assets in the U.S.

Canada can help Trump in his mission to reduce his trade deficit, by bringing some of that capital home. In the face of his attacks, we face an urgent challenge to build a more sovereign and self-reliant economy. We need to diversify not just where we sell exports, but what we sell – breaking free of our precarious reliance on raw resource exports. We need to build infrastructure, high-tech industries, and affordable housing.

All that will require massive amounts of capital – and we have $1.6 trillion sitting in the U.S. So let’s bring it home, including by repatriating some of those tax-subsidized pension investments. That will shrink the U.S. trade deficit.

And Donald Trump should thank us for it.

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