MNI: Carney To Take On Trump, Be Fiscally Cautious - Ministers
MNI (OTTAWA) - Incoming Canadian Prime Minister Mark Carney has a clear mandate to stand on his credentials as former BOC and BOE Governor to take a tough stand against Donald Trump's tariffs while being cautious about further deficit outlays to protect the economy, cabinet ministers told MNI.
"We need to be able to fight back,” Patty Hajdu, the minister in charge of economic development in the timber and mineral region of Northern Ontario, told MNI at the Liberal leadership convention Sunday. “We are getting a new leader precisely when we need to.” Carney has said he favors dollar-for-dollar retaliatory tariffs and is looking at other non-tariff measures.
While the new leader can ride a wave of Canadian nationalism in response to Trump's threats of economic domination it's unwise to replicate fiscal supports used during the pandemic, she said. “We have to do so in a thoughtful way, obviously we pulled out all the stops in the pandemic, and there was a price to pay for that.” Trudeau's support fell apart late last year when his then Finance Minister Chrystia Freeland quit rather than deliver what she called big spending that failed to prepare for Trump's second term.
Hajdu also said Canada should remain measured with retaliatory tariffs. “Every tariff that we impose actually has a consequence for Canadians,” she said. BOC Governor Tiff Macklem has warned he can only cut rates so far if the economy suffers, given the competing risk that tariffs will result in persistent inflation. (See: MNI: Canada Tariff Retaliation Seen Limited By Domestic Pain)
One good way to get the fiscal support right is to keep it in line with revenue from retaliatory tariffs, Industry Minister Francois-Philippe Champagne told MNI. “We will certainly use these proceeds to support our economy, to support our workers, to support our businesses,” he said.
HIT WHERE IT HURTS
The new Liberal leader will capitalize on the stock market declines in response to Trump's actions, Champagne said. “The markets have spoken. There is policy fatigue, and uncertainty cannot become the new certainty.”
Trade Minister Mary Ng told MNI the new prime minister will have momentum in talks with the U.S., saying “Canadians are sovereign, Canadians are proud, and we are nice but we will not be pushed around.”
There is no rush to spend a lot supporting the economy, she said. “We’re going to have to still just take it step by step, knowing that we will always stand up for our workers.”
The chief of staff to former prime minister Jean Chretien, who made waves by refusing to join the U.S. war against Iraq, took the hardest line on dealing with Trump. "We should hit them where it hurts, and an export tax particularly on potash would be a very good thing to do,” Eddie Goldenberg said. Chretien himself told the convention Canada should put export taxes on several key products including energy.
Carney will soon face an election against Conservative Pierre Poilievre, who has long attacked Liberals for big deficits. Goldenberg said voters will prefer strong supports. “It’s not a question of if we can fend off the criticism, it’s what do you do for workers who are losing their jobs because of what the Americans are doing, and I think a good government would compensate workers as much as possible.” (See: MNI INTERVIEW: Poilievre Austerity Promise At Risk- Ex PM Aide)