In the face of the trade war, Canadian Prime Minister Mark Carney has used most of his fiscal space to begin structural transformation of the economy. The question now is how much room he has left for policy maneuver. The federal government continues to widen its fiscal deficit and increase investment in investment, defense, housing, and infrastructure. The protracted tariff dispute between Canada and the US allows Carney to package this expenditure as a necessary measure to protect Canada's economic sovereignty and national security. However, if the trade war eases, it will be difficult for this rhetoric to continue to hold true: one scenario is that the Democratic Party takes control of Congress to take back the president's tariff authority; in another scenario, as some observers predict, Trump takes the initiative to calm down the tough threat against Canada. This is good for the Canadian economy, but it will also make Carney's core reason for large-scale borrowing disappear. Many economists believe that the country's sluggish investment and long-term pressure on productivity alone are sufficient grounds for the government to increase fiscal spending. After all, these problems existed before Trump's second term.

In the face of the trade war, Canadian Prime Minister Mark Carney has used most of his fiscal space to begin structural transformation of the economy. The question now is how much room he has left for policy maneuver. The federal government continues to widen its fiscal deficit and increase investment in investment, defense, housing, and infrastructure. The protracted tariff dispute between Canada and the US allows Carney to package this expenditure as a necessary measure to protect Canada's economic sovereignty and national security. However, if the trade war eases, it will be difficult for this rhetoric to continue to hold true: one scenario is that the Democratic Party takes control of Congress to take back the president's tariff authority; in another scenario, as some observers predict, Trump takes the initiative to calm down the tough threat against Canada. This is good for the Canadian economy, but it will also make Carney's core reason for large-scale borrowing disappear. Many economists believe that the country's sluggish investment and long-term pressure on productivity alone are sufficient grounds for the government to increase fiscal spending. After all, these problems existed before Trump's second term.