Ontario tables massive deficit in 2025 budget amid Trump tariffs

Doug Ford's new budget is awash in red ink, with a $14.6-billion deficit planned for the next fiscal year largely to deal with the economic pain of a trade war with the United States.

The $232-billion budget delivers on a promise the premier made during his reelection campaign in February to spend big on tariff relief programs. It also presents a starkly different picture of Ontario's financial future than the one shared in the 2024 fall economic statement, with a longer path to balance.

"Now is the time to invest in business and workers as we face this challenge, it is not the time to take our foot off the pedal of building infrastructure," Finance Minister Peter Bethlenfalvy said to reporters at Queen's Park.

In the legislature, much of the finance minister's speech focused on the actions of U.S. President Donald Trump, who in a viral exchange, told Ukrainian President Volodymyr Zelenskyy his country did not "have any cards" without the United States.

"Here in Ontario, we have all the cards we need," Bethlenfalvy told his fellow MPPs, referencing the province's natural resources and workforce.

As recently as last fall, the province predicted a $1.5-billion deficit in this spending plan.

WATCH | Ontario's former chief economist on what's missing in Ford's 2025 budget:

The Ontario government’s 2025 budget includes a $14.6-billion deficit and $33 billion in planned infrastructure investment planned for the next fiscal year. Brian Lewis, Ontario's former chief economist, breaks down what’s missing from Ford’s budget and if it is possible for the PCs to achieve balance.

The budget also includes previously promised measures like a $9-billion tax deferral and a $5-billion fund for businesses.

Tariff relief measures include:

• The "Protect Ontario Account" of up to $5 billion in funding that will act as an emergency funding backstop for tariff-disrupted businesses.

• Tax deferrals from April to October for about 80,000 businesses, costing the province $9 billion, a relief program modelled after one the province implemented during the pandemic.

• A trade-impacted communities program, providing up to $40 million in grants to communities and local industries.

• $20 million in spending on new training and support in communities that experienced mass layoffs.

The government's path to a balanced budget has been extended by a year in part due to the impact of American tariffs.

After projecting a small surplus in 2026-27 in the fall economic statement, the government now expects to run a nearly $8-billion deficit that year, before balancing the budget in 2027-28.

The province has also lowered its revenue expectations for the next few years, as Ontario is poised to be hit particularly hard by tariffs.

"When I tabled the fall economic statement, Donald Trump hadn't been elected," Bethlenfalvy said. He added a balanced budget is "on my wishlist every Christmas."

WATCH | Ontario budget shows government struggling to hit housing goal:

According to Ontario’s new budget, housing starts in 2025 are projected to be around 2,800 units lower than in 2024. Alex Beheshti, senior researcher at Missing Middle Initiative, discusses what the projections mean for the future of homes in the province.

But those aren't the only adjusted projections.

Housing starts in 2025 are projected to be around 2,800 units lower than in 2024 and job creation is expected to be cut in half. The province will be spending $16.2 billion on interest and other debt charges in 2025-26, more than the base budget for post secondary education or justice.

The drop in housing starts is another sign that the Ford government is struggling to hit its goal of getting 1.5 million homes built by 2031, which would require 100,000 housing starts per year.

But all of the projections are being made in a world of constant uncertainty when it comes to what President Donald Trump may or may not do with future tariffs. If the economic situation turns out worse than expected, the deficit could be as high as $17.1 billion.

The budget also shows that Ontario's total debt will rise to $489.8 billion in 2025-26. During the 2018 campaign, the Progressive Conservatives said if the Kathleen Wynne Liberal government was reelected, it would "pile onto our debt."

Since 2020, Ontario's debt has risen by about 21 per cent under the Ford government, according to the budget.

Leader of the Official Opposition NDP Marit Stiles called the document a "band-aid budget."

"For families wondering how they'll make ends meet this summer, for overworked health care or education workers, for auto workers who are worried about their livelihoods, this budget delivers little hope and no reassurance," she said.

Liberal finance critic Stephanie Bowman slammed the government for failing to meet the moment. The Tories should have cut taxes to help families address the affordability crisis and the impact of Trump's tariffs, she said.

"It's an understatement to say that what the finance minister delivered is underwhelming and insufficient," Bowman said.

Green Party Leader Mike Schreiner said the government doesn't have the fiscal capacity it should to address tariffs because of past spending decisions.

"This is the government that spent $3.2 billion sending $200 cheques to millionaires and billionaires," he said.