Canada’s 2025 federal budget, and those that follow in the coming years, may prove to be the most important since the beginning of the Second World War.

Canada’s longstanding, co-dependent economic relationship with the United States has abruptly and involuntarily ended following U.S. President Donald Trump’s imposition of tariffs and threats of annexation.

These actions have forced Canada to rethink its economic future and reduce its dependence on the U.S. Canada can no longer assume that 75 per cent of its merchandise exports will go to the U.S. in key sectors like energy and manufacturing, which together accounted for 19 per cent of Canada’s GDP in 2023.

No other country accounts for more than five per cent of Canadian exports, and about 45 per cent of foreign direct investment still originates from the U.S. Canada is in an economic war, with national security at risk and thousands of industrial jobs on the line in the immediate future.

How Ottawa responds through an alternative comprehensive economic strategy, beginning with the 2025 federal budget, will determine whether Canada can navigate this new geopolitical and economic reality.

Canada’s history provides guidance on how to deal with a crisis of this scale. Given the isolationism south of the border, the only serious option for Canada is a national industrial policy

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