Canada’s finance minister says he needs to scrutinize the size of the government. As the country prepares for significant new defense spending and potential economic disruption from its largest trading partner. This is why it focuses majorly on save more and spend less.
“The continued significant spending in many areas has to be ratcheted down. My view is things as simple as the growth of government need to be looked at,”. Dominic LeBlanc said in an interview with Amanda Lang on BNN Bloomberg Television.
He also suggested he’s leery of the country’s elevated expenditures. This will increase further if Canada follows through on its promise to spend 2% of gross domestic product on defense. Plus, it acknowledges the difficulty of finding additional tax revenues in the current economic and political landscape.
Save More and Spend Less: What Else Has Been Said?
“I don’t think we can raise revenues anymore,” he said. “So what areas are we looking to be in a position to both be fiscally responsible. But, meet the need of the moment? That’s the challenge that I hope I can work on.”
LeBlanc’s comments refute the notion that the federal government would respond to a possible trade battle. This will be similar to the COVID-19 pandemic. In 2020, the government spent hundreds of billions on support measures for businesses and households. This will be adding to the national debt and significantly eroding the country’s fiscal position.
He reiterated that any retaliatory tariffs collected by Canada would be redistributed to affected firms and households.
‘Optimistic’ on Trade Talks
US President Donald Trump has threatened 25% tariffs on imports of Canadian goods. Along with it, 10% on oil shipments. Canada had been prepared to levy 25% tariffs on US goods imports in response. On Monday, Trump delayed the implementation of the tariffs for 30 days after Canada made what he considered acceptable efforts. This was done to stop the flow of fentanyl and people across the border between the two countries.
“We can resolve the border issue,” LeBlanc said. “We can live to fight another day, and we should be optimistic about that.”
Conclusion
LeBlanc said he believes incoming US Commerce Secretary Howard Lutnick will advise Trump. This will be on the “global trade balance circumstance,” which would reveal Canada’s relatively tiny surplus.
LeBlanc said he’s optimistic Canada won’t be “seen as a problem in that larger context.”
He also said he wasn’t open to negotiating supply management issues with the US, referring to Canada’s protected dairy industry. This was a sore point during the renegotiation of the North American free trade deal during Trump’s first term.