Ford Government Adjusts Fiscal Outlook as Tariffs Hammer Key Industries; Focus Turns to Job Protection, Infrastructure, and Northern Ontario Development
THUNDER BAY, ON – The Ontario government is forecasting a deficit nearly ten times higher than previously estimated, projecting a $14.6 billion shortfall for the 2025-26 fiscal year as U.S. tariffs on Ontario’s auto, steel, and aluminum sectors take a heavy toll on the provincial economy.
In a budget delivered Thursday, the Ford government dramatically revised its outlook from the $1.5 billion deficit forecast last November, which had been based on pre-tariff economic conditions.
Now, the province expects real GDP growth of just 0.8%—half the rate previously forecast, with corporate tax revenues set to fall as key industries slow down. The Ford government has pushed back its balanced budget target to 2027-28, after initially aiming for a surplus in 2026-27.
Tariffs Take Toll Across Canada
Ontario’s sobering fiscal picture follows similar reports from Alberta, B.C., and Quebec, all of which have also posted ballooning deficits as Donald Trump’s trade war escalates, triggering economic uncertainty across Canada.
Key Budget Highlights and Northern Ontario Focus
Despite the red ink, Finance Minister Peter Bethlenfalvy described the budget as a “plan to protect workers, businesses, and communities”, while pledging to accelerate investments in infrastructure and critical mineral development in Northern Ontario.
Northern Ontario and Indigenous Economic Development:
-
The government is tripling its Indigenous loan guarantee fund to $3 billion, to support participation in energy, mining, and resource projects, including those tied to Northern Ontario’s Ring of Fire region.
-
A new $500 million fund will subsidize processing facilities for critical minerals, positioning Northern Ontario as a hub for the emerging clean energy economy.
Infrastructure Commitments:
-
Ontario will continue with its $200 billion infrastructure buildout, which includes transit, highways, hospitals, schools, and northern road and broadband projects.
-
The Building Ontario Fund will receive an additional $5 billion, although few major projects have been financed to date.
Support for Businesses Impacted by Tariffs:
-
The budget enacts a $5 billion “Protecting Ontario Account” emergency fund, offering liquidity relief for companies hit hardest by U.S. tariffs.
-
It expands previously announced $11 billion in tax deferrals and credits for manufacturers.
Spending and Debt Outlook:
-
The province’s debt is projected to reach $460 billion, with a **net-debt-to-GDP ratio climbing slightly but remaining below the 40% target.
-
Annual interest payments will rise to $16.2 billion, though remain manageable as a percentage of spending.
Other Measures and Controversies
-
The budget pledges $280 million for private health clinics, a move critics say undermines public health care.
-
Tax cuts for microbreweries, cidermakers, and ready-to-drink alcohol sellers remain a talking point, as opposition leaders highlight the disproportionate attention to alcohol over healthcare.
-
The budget also reaffirms Premier Ford’s controversial plans to remove bike lanes in parts of Toronto, while signaling openness to compromise on some routes.
Opposition Reaction
NDP Leader Marit Stiles blasted the budget as a “missed opportunity” to build a tariff-proof future, criticizing cuts to education, health care, and social services.
Ontario Liberal Leader Bonnie Crombie called it a “painful reminder” that the government is failing young people and families struggling with housing and affordability.
