While the U.S. economy remains resilient despite low sentiment, Canada shows a strong link between negative sentiment and weak economic data, according to a recent TD client presentation by Toronto Dominion Bank chief economist Beata Caranci.

Concerns are growing in Canada due to 75,000 job losses in two months, with half in manufacturing, she said.

TD Bank anticipates an additional 100,000 Canadian job losses by the end of the third quarter, pushing the unemployment rate to 7.2%, a 1% increase from their December projection.

Canada dropped most counter-tariffs to 'nearly zero' before the election https://t.co/uvNSIOV7ha

— Yanky 🇺🇲 (@Yanky_Pollak) May 19, 2025

Others increasingly predict that Canada is already in an early recession, according to the Financial Post.

Bloomberg's surveyed economists agree Canada is in an early recession, anticipating a 1% annualized economic contraction in the second quarter and 0.1% in the third.

Caranci states that the U.S. tariff war has caused deeper negative sentiment among Canadian businesses and households than even the pandemic.

TD Bank has revised its GDP forecast, now anticipating economic contraction in the second and third quarters.

Minister @FinanceCanada serves notice of bills for $6.1B in annual tax cuts "putting more money in the pockets of Canadians," says @FP_Champagne.  https://t.co/fDXlV70pFL #cdnpoli pic.twitter.com/0aJJKiBSLx

— Blacklock's Reporter (@mindingottawa) May 28, 2025

Prime Minister Mark Carney's new government has delayed its budget until the fall but is implementing measures to boost the economy, which are expected to be insufficient.

Finance Minister François-Philippe Champagne announced billions in promised tax cuts yesterday through a Ways And Means Motion, a prerequisite for tax changes. 

Proposed Income Tax Act amendments would lower the tax rate on the first $57,375 of taxable income from 15% to 14% by 2026. It will cost taxpayers roughly $5.6 billion annually, translating to a mere $32 for average income earners.

The motion also suggests removing the GST on new homes under $1 million for first-time buyers, with an estimated cost of $383 million next year.

Caranci advocates spending incentives like climate-friendly renovation tax credits or a GST holiday over a broad tax cut. However, prior tax reprieve was called a “token gesture” that provided negligible benefit to taxpayers.

In a Toronto Sun commentary, Dr. Sylvain Charlebois stated the average Canadian household would save only $4.51 in GST, noting Canadians could save almost $20 on a takeout order instead.

Then-finance minister Chrystia Freeland went on to resign from the portfolio, in part to the “costly political gimmick.” Cabinet estimated the cost to taxpayers at $1.6 billion, Blacklock’s learned. It failed to stimulate consumer spending.

“How to spend a $5-6 billion price tag in the early days of this transition will be key to putting a floor under the economy, because doing minimal measures means that by the time the House returns in September, there’s a good chance Canada is already in a recession,” said Caranci.

“By then, any negative employment dynamics become harder to unwind.”

To be clear, Carney’s decision to eliminate most counter-tariffs was economically sound.

However, initiating such a consequential shift in trade policy—mid-election, without an electoral mandate, and amid the saturation of nationalistic slogans like “Not For Sale” and “Elbows… https://t.co/rA62TDlhNb

— The Food Professor (@FoodProfessor) May 19, 2025

Meanwhile, Canada has largely suspended retaliatory tariffs on U.S. goods, which Oxford Economics predicts will reduce inflation risks and improve Canada's economic outlook. 

Though Canada delayed its budget until the fall session, government spending is expected to lessen the effects of the recession this year and next.

These retaliatory tariffs, imposed in response to Trump's trade war, followed earlier Canadian levies on U.S. vehicles and correlated with recent job losses in Canadian manufacturing (30,600) and retail (26,800) last month.

Ontario is projected to face significant job losses, particularly in metal industries and automotive supply chains. 

The Liberal election victory was partly due to their pledge to effectively manage trade relations with the U.S., Canada's largest export market.

Please help me stop Mark Carney — before it’s too late!

Mark Carney wasn’t elected — he was installed by the global elites. And now that he’s in charge, they think they’ve won. But not if we have anything to say about it. While the bought-and-paid-for media slobber over their new golden boy, we’re hitting the streets, digging into his World Economic Forum playbook, and calling out the radical agenda they’re trying to ram down Canada’s throat. This is the fight of our lives — and we’re not backing down. Help us keep our reporters on the ground, our billboard truck on the move, and our message uncensored. Pitch in now if you want to stop Mark Carney before he does irreversible damage.

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