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Investing.com -- Ontario’s 2025 budget marks one of its most ambitious efforts to shield the province from growing cross-border trade uncertainty, laying out over $30 billion in tariff-related measures while projecting a widened deficit of $14.6 billion. Released Thursday, the budget, titled “A Plan to Protect Ontario,” focuses extensively on strategic capital investment, business support, and industrial self-reliance in response to the economic threat posed by U.S. tariffs.

With real GDP growth projected to slow to just 0.8% this year, down from robust expansion in 2024, the government under Premier Doug Ford has prioritized stimulus in the form of industrial policy, tax credits, and emergency funds for affected companies. “This spending is needed to weather the storm,” Finance Minister Peter Bethlenfalvy said, referring to the U.S. tariffs, adding the goal is to make Ontario’s economy “more resilient and self-reliant.”

At the center of the budget is a sweeping suite of manufacturing and business programs, including a $5 billion Protecting Ontario Account for distressed sectors and an enhanced Ontario Made Manufacturing Investment Tax Credit worth $1.3 billion over three years. Another key component defers select provincial taxes for six months starting April 2025, unlocking up to $9 billion in liquidity for 80,000 businesses expected to face trade-related disruptions.

CIBC (TSX:CM) economist Andre Grantham highlighted the fiscal consequences of this proactive stance, noting, “Ontario’s budget deficit is projected to widen to $14.6 billion in the current fiscal year (1.2% of GDP)… due in part to an expected tariff-led slowdown in economic growth as well as measures to help support households and businesses.” He added that contingencies embedded in the budget reflect “the uncertain economic outlook,” with downside risks tied closely to the trajectory of U.S. trade policy.

The capital side of the budget is anchored by over $200 billion in infrastructure projects over ten years, including $61 billion for public transit, $30 billion for highways, and $56 billion in healthcare facility upgrades. Uniquely, the government aims to promote domestic industry by requiring made-in-Ontario materials for publicly funded builds, including cement, steel, and forestry goods, as a further buffer against foreign supply chain volatility.

In a rare bipartisan consensus on the challenge ahead, opposition leaders acknowledged the need to respond to tariff-related pressures while questioning the budget’s priorities. Ontario NDP Leader Marit Stiles said, “This budget is a test of whether this government will choose to strengthen Ontario and build a tariff-proof future over vanity projects and delaying critical infrastructure.” Liberal Leader Bonnie Crombie added, “Will Doug Ford invest in your family—or in his friends?”

Ontario’s financing strategy reflects its evolving fiscal profile, with $59.8 billion in total funding requirements this year, including $42.8 billion in long-term borrowing. While that is down from the $49.5 billion issued in 2024, padded by pre-borrowing, net debt is expected to increase by $33 billion this year, pushing the net debt-to-GDP ratio to 37.9%, though still under the government’s 40% ceiling.

Economists warn that investor sentiment could sour if tariffs persist or deepen, disproportionately affecting trade-dependent provinces like Ontario. Creating a backstop through expanded contingency funds and industrial incentives, the 2025 budget attempts to signal resolve, but the ultimate success may depend less on Queen’s Park... and more on Washington.

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