The Ford government plans to run a substantial deficit of almost $15 billion and spend more than $230 billion this year, as the province’s economy struggles under the weight of tariffs from the United States.
On Thursday, Finance Minister Peter Bethlenfalvy presented the government’s 2025 budget, a document dominated by the tariff response and how it will impact the province’s economy.
A series of economic indicators in the budget suggest Ontario is set for tough times: the economy could shrink, and job creation numbers are set to fall dramatically, while unemployment rates are increasing, compared to the government’s pre-Trump economic forecasts.
The government’s economic growth projections — which had been relatively rosy in last year’s budget — have been revised down.
In both the medium and fast-growth scenarios, Ontario’s economy would continue to grow despite the tariffs. A slow growth situation, however, would see Ontario’s economy stagnate in 2025 and potentially shrink by 0.4 per cent next year.
“Ontario and all of Canada are at a precipice, and we need to take serious steps to make sure we do not find ourselves anywhere near the bottom,” Bethlenfalvy said on Thursday.
“These tariffs, imposed by the U.S., have been a wake-up call for Canadians, a wake-up call that highlights the underlying issues we face as an economy, and a nation. But now is not the time for fear of tariffs and uncertainty, now is the time for growth and improvement.”
The province’s economic planning had its head turned toward the end of last year, when U.S. President Donald Trump began discussing imposing tariffs on many nations, often singling out Canada.
Some of Trump’s promised tariffs have failed to materialize, and Canada has avoided some of the worst fees levied by the United States. However, the economy has still been hit.
The United States currently charges 25 per cent tariffs on Canadian steel, aluminum and vehicles.
Studies included in the budget show Trump’s tariffs have destroyed consumer and business confidence. Both are at their lowest points since the COVID-19 pandemic, and the business mood is even lower than it was during the global emergency.
In response, the government has unveiled a budget with a deficit $10 billion further into the red than it had planned last year. The massive deficit increase delays the government’s plan to balance the budget by at least a year, a move the finance minister said is necessary to support the province through economic shocks.
“Now is the time to invest in business and workers as we face this challenge,” Bethlenfalvy said. “It is not the time to take our foot off the pedal.”
The government’s opponents, however, say the measures fail to protect people facing immediate layoffs.
“This is a band-aid budget,” Ontario NDP Leader Marit Stiles said.
“It doubles down on housing failures and there are no solutions for these communities with closed emergency rooms and delayed hospitals.”
As a result of the government’s delayed path to balance, Ontario will run deficits worth an extra $18.3 billion compared to its plan last year.
Ontario will spend $16 billion on debt payments this year alone.
“This government is spending more per capita in real dollars than any other government in Ontario history”, Ontario Liberal MPP Stephanie Bowman said.
“And yet all we have to show for it is crumbling infrastructure and crises in health care, housing, education and more.”
Green Party Leader Mike Schreiner said the budget failed to help people who need it now.
“This budget ignores the fact that people are going to be hurt by the trade war,” he said in a statement. “We need a budget that actually invests in people.”
The tariff response
A series of new tariff response and relief programs dominate the budget document, titled A Plan to Protect Ontario.
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Many of the new measures unveiled in the document were promised by the Progressive Conservatives during February’s snap election campaign. Some had been released before the budget, but many were confirmed for the first time on Thursday.
Among them is the $5 billion “Protect Ontario account,” designed to help businesses weather the economic storm created by Trump’s tariff war.
Bethlenfalvy tabled the budget with a promise that the document aims to take care of the 285,000 Ontario workers whose jobs rely on direct trade with the U.S.
The account, first announced in the Progressive Conservative platform, is expected to offer business owners at least $1 billion in “immediate liquidity relief” if employers face disruptions.
The government said the funds will serve as an “emergency backstop” for any businesses that can’t get other funding and will work in tandem with support from the federal government.
The rest of the account – $4 billion in total – would fund a “variety of programs” to help businesses impacted by tariff-related disruptions.
The eligibility criteria for the funding, or the specific programs it would pay for, weren’t spelled out in the budget.
Officials with the Ministry of Finance said the program was designed to be only an emergency backup — but suggested it might be triggered by individual shutdowns or relocations rather than broader tariff impacts. Its eligibility criteria have not been finalized.
The government also announced a $50-million fund to help businesses find new trading partners, allowing them to reduce their dependence on the United States.
The document includes some smaller measures for laid-off workers and impacted communities.
Workers who lose their jobs as a result of tariffs will be able to access new training and support centres to help them transition to new jobs.
The $20-million program, the government said, would put workers in touch with service managers, unions, community groups, and colleges and universities and would allow them to access training referrals and assistance with job searches.
Communities hit especially hard by the tariffs — manufacturing hubs, border communities or vehicle-making towns — are also eligible for a small boost. The government has put aside $40 million for those areas.
The budget also includes a number of broader tax credits or boosts to try to stimulate the economy. There’s a previously-announced $1.3 billion in a manufacturing tax credit, rebating Workplace Safety and Insurance Board payments and continued tax incentives for vehicle makers to remain in Ontario.
The mineral-rich Ring of Fire in northern Ontario — central to the Ford government’s economic plan — is also the subject of some budget announcements.
They include between $1 billion and $3 billion to “increase opportunities for Indigenous communities” to invest in the energy system and $500 million to ensure minerals mined in Ontario are refined in the province as well.
In total, the government said it had announced $30 billion of new measures — although all that money will not be spent this year and that includers measures like making the gas tax cut permanent.
Revised projections
Before Trump’s election, Ontario was projecting a strong economy that continued to bounce back from the pandemic.
American tariffs on Canadian exports, however, appear to have stunted the province’s economic future and crippled the confidence of businesses and consumers about the months and years ahead.
The government’s budget shows that confidence among small business owners in the economy has plummeted to 32.7 per cent, lower than how business owners felt at the beginning of the COVID-19 lockdown in March 2020.
Similarly, confidence among consumers has also dropped to 43.9 per cent, compared to the 37.4 per cent reported in March 2020.
The steep drop appears to have significantly impacted Ontario’s employment projections compared to 2024.
Employment in 2025 is now expected to increase by 0.9 per cent this year, compared to 1.7 per cent, while the province is expecting to add 73,000 jobs, down from last year’s projection of 130,000.
The economic situation appears to grow worse in 2026, when the province projects to add 33,000 new jobs, down from 133,000 projected in 2024.
The unemployment rate is expected to hover around 7.1 per cent, on average, over the next three years.
There are other signs people are worried.
The government’s revenue from vices — things like drinking or gambling — is also down, generally an indicator that people are planning to spend less.
Income from the LCBO will drop dramatically from $2.5 billion in 2022 to a projected $1.9 billion this year. Cannabis revenue is down from $234 million to $215 million, and Ontario Lottery and Gaming Corporation revenue is down from $2.5 billion to $2.4 billion
Few new details on major projects
While the budget included details of the province’s economic outlook and how it would respond to tariffs, there were few new details on the government’s signature projects.
Highway 413 — which has been a priority since 2019 — still does not have an official price tag, nor does the Bradford Bypass. Both projects were centrepieces of the Progressive Conservatives’ 2022 election campaign.
The details included in the budget suggest the projects may in fact be some way from becoming a reality.
Highway 413, which the government had hoped to begin construction on early in 2025, has only 90 per cent of its preliminary work. The budget said that to build the route, 500 properties will need to be expropriated.
For the Bradford Bypass, detailed design contracts still need to be finished for parts of the route, which have only seen early works.
Ontario Premier Doug Ford’s plan to tunnel a new expressway under Highway 401 is also not included in the costings. Only a small figure for a feasibility study is factored into the government’s long-term costings.
An ambitious expansion of the GO Train network — potentially adding an entire line running through midtown Toronto — is not factored into the long-term picture either. Feasibility studies are included in the plan.
The government used the budget to announce that it planned to remove more bike lanes from the streets of Toronto.
The Ford government previously announced it would remove bike lanes from University Avenue, Yonge Street and Bloor Street — a move that is currently at the centre of a legal battle.
The budget announces the government’s plan to take away two more bike lanes: one is Queen’s Park Crescent and the other is Avenue Road.
Health and education two largest spending items
The new budget includes some notable changes to spending and plans for major portfolios like health and education, the two most expensive ministries in the government.
In total, health care spending this year will account for 39 per cent of all government costs — sitting at $91.1 billion. Education is the next largest category with a price tag of $21 billion, or 18 per cent.
The government said its new budget includes $1.1 billion this year for hospitals, including base funding, targeted funding and money for surgery. Over the next decade, Ontario will spend $56 billion on hospital construction, with small planning grants awarded to hospitals in Campbellford and Orillia.
The budget also includes $300 million, which the government is earmarking to expand primary care teaching hubs to increase the number of primary care providers in Ontario.
Elsewhere, the government said it will spend $55.8 million over two years on teacher training, a move it hopes will add 2,600 new teachers by 2027.
The best-case scenario will see Ontario balance the budget in 2027.
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