Balancing books, tariffs and everything else

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This article was published 20/02/2025 (202 days ago), so information in it may no longer be current.

Manitoba is preparing a budget ahead of crippling trade tariffs threatened by U.S. President Donald Trump, while it promises to protect jobs, support industries and balance the books in its first term.

As budget public consultations end Friday, Finance Minister Adrien Sala said the potential of Trump’s tariffs are a concern to Manitobans.

“We continue to hear the importance of investing in health care, improving affordability in Manitoba,” Sala said Thursday from his office at the legislature. “And, of course, we have heard worry about some of the tariff concerns down south.”

Sala said the province needs to be “nimble,” and is preparing two scenarios — one with tariffs, one without.

Trump’s plan to impose 25 per cent tariffs on goods imported from Canada starting Mar. 4 threatens to starve Premier Wab Kinew’s metaphorical “economic horse that pulls the social cart.”

The premier’s mantra about a strong economy helping to fund health, education and social services could be out the window if Canada’s economy weakens — especially in Manitoba, a province heavily reliant on federal transfer payments.

The finance minister said the province will support industries and manufacturers by growing the economy but didn’t say how.

“We’re prepared for all eventualities to make sure that no matter what comes, we will have the investments or the ability to make the investments required to protect jobs here in our province. At this point, again, there’s a lot of uncertainty,” Sala said.

Despite that uncertainty and a provincial deficit pegged at $1.3 billion, Sala was certain the government will keep its promise to balance the books.

“We’re prepared for all eventualities to make sure that no matter what comes, we will have the investments or the ability to make the investments required to protect jobs here in our province.”–Adrien Sala

“We’re still committed to balancing the budget the final year of our mandate, and we’re going to continue to ensure that we support more economic growth here in Manitoba, more jobs, and we’re going to protect our manufacturers against whatever comes up.”

Sala didn’t say what form that support could take, such as tax deferrals, grants or loans. He also wouldn’t say how much the province would budget for that support or if a plan to balance the budget includes spending cuts or tax increases.

The finance minister didn’t directly answer a question of whether balancing the budget by 2027 is a bigger priority than supporting those hit by tariffs.

“Ensuring that we focus on supporting Manitobans during this time is critical for our government — that will see us focusing on continuing to invest in health care, which of course has an economic aspect to it, continuing to make life more affordable while we work to grow our provincial economy to create good opportunities for Manitobans,” he said.

Now that Trump is in office waging a trade war against Canada, Manitoba faces greater “existential threats” than fighting the deficit, said Molly McCracken, Manitoba director for the Canadian Centre for Policy Alternatives.

“The 2025-26 Manitoba budget should build resilience so that Manitoba can guard our province against emerging risks,” she said.

McCracken said the time is ripe to develop a green economy by supporting economic growth from the bottom up and addressing the infrastructure deficit by making capital and training investments in roads, housing, transit, child care and recreation.

Political turmoil at the federal level isn’t helping matters, University of Winnipeg political science Prof. Malcolm Bird said.

“Trade is clearly in the federal government zone. The big problem is that our federal government at the political realm is chaotic,” he said, noting the ongoing Liberal leadership race, Prime Minister Justin Trudeau resigning but staying on as leader, and a looming election.

“As a result, it’s the provinces who are going to bear most of the costs of this in terms of immediate costs — you know, job losses, income loss, et cetera,” Bird said.

David McLaughlin, who was Manitoba’s top bureaucrat when the COVID-19 pandemic hit and caused major economic uncertainty, said provinces have a number of things they can control and plan for, even during a crisis.

“What is different in the Trump tariff threat is we don’t know if it will happen, when it will happen, and what it will cover. Building a budget to precisely fit what Donald Trump says is going to be risky,” said David McLaughlin, who was clerk of the executive council from 2020 to 2021.

McLaughlin, who was appointed by former premier Brian Pallister, said the government won’t be working completely in the dark.

“They know the tariff exposure of Manitoba exports to the U.S. We have data on that. They have been given some assurance by the federal government as to financial support. If not, those first ministers meetings were a giant waste of time for Premier Kinew.”

The government can produce a budget under these circumstances, but shouldn’t overplay the tariff threat or underestimate it, McLaughlin said.

“The best budget medicine right now for Manitobans is transparency and honesty. Use the budget to clearly explain what is at risk and what is not. Explain the magnitude of that risk. Spell out the factors at play. Identify the steps you are taking to mitigate the damage and protect Manitobans.”

carol.sanders@freepress.mb.ca