In wake of Trump tariffs, Canada must reinvent its economy like it did after Second World War, says Champagne

Left: Finance Minister François-Philippe Champagne. Right: U.S. President Donald Trump. (The Canadian Press / The Associated Press)

Canada needs to reinvent its economy like it did after the Second World War, according to Finance Minister François-Philippe Champagne.

“Our largest trading partner is turning its back on us,” said Champagne during an interview Wednesday on CTV’s Your Morning, where he explained the trade war has pushed the country into “one of those moments” that requires transformational change.

Canada is in trade wars with the U.S. and China, and the economy is showing wounds. Exports fell by 27 per cent in the second quarter after companies rushed orders to get ahead of tariffs earlier this year. As a result, Canada’s trade deficit ballooned.

Gross domestic product slipped by about 1.5 per cent in the second quarter of this year as U.S. tariffs and trade uncertainty weighed on economic activity.

“That is a big decline in the second quarter,” Pedro Antunes, chief economist for the Conference Board of Canada, told CTV News Channel on Wednesday. “We’re not going to see very strong growth in the third. We’re expecting flat.”

“That’s pretty much a recession,” he added.

That context is what pushed Canada’s central bank to drop its key lending rate by a quarter of a per cent on Wednesday, and Antunes said the bank could cut it deeper if the economy remains weakened.

Canada in 1945

In the face of commercial turmoil, rising joblessness and uncertainty, Champagne said Canada needs to reinvent its economy as it did in 1945.

Canadians saw an era of economic prosperity in the postwar period, which fed into an explosion in suburbs development, transportation expansion and hydroelectric infrastructure. Cars, televisions and other goods finally became accessible to consumers that were previously too expensive or unavailable because of wartime restrictions.

“They did this collective effort to put Canada on a strong footing for success for the next 50, 80 years,” said Champagne.

“We’ve done it before, we’re going to do it again. We attract a lot of talent. We build ships. We build planes. We build cars. We have critical minerals. We have energy. We are the only G7 country with a free trade agreement with all the other G7 nations.”

But the future of one of those agreements – the Canada-U.S.-Mexico Agreement, or CUSMA – is uncertain.

CUSMA shields Canada from the bulk of U.S. President Donald Trump’s tariffs. It’s up for review on July 1, 2026. The United States has formally begun its public consultation process ahead of that review.

Trump negotiated the deal during his first term and has publicly praised it since then. Though he has also questioned whether its still necessary.

The Liberal budget

Champagne, speaking to Your Morning about the upcoming federal budget, said it would bring a “generational investment in our future” and promised some sort of relief to Trump’s tariffs.

The Liberals will table their budget on Nov. 4 – Champagne’s first as finance minister. The federal budget typically arrives in the spring but the Liberals delayed it until the fall. The prime minister has billed the budget as one of both cost-cutting and investment.

• Liberals will table the federal budget on Nov. 4, Champagne says

“If you’re in the auto-sector today, or if you’re in the steel sector, obviously the tariffs that have been imposed by our trading partner have been hurting. … We need to support our workers as we transition to a more resilient economy.”

Asked where that money would be reallocated from, Champagne said the government is working to cut its own operating expenses, and vowed to balance the operating budget within three years.