Carney faces SME pushback and union pressure as policy divides deepen across regions and sectors
Prime Minister Mark Carney’s minority victory has sparked concerns over policy paralysis, economic headwinds, and renewed uncertainty in Canada–US trade talks — raising caution among investors and market analysts.
Catherine Swift, president of the Coalition of Concerned Manufacturers and Businesses Canada, warned that Carney’s continued support for net-zero regulation and carbon pricing risks accelerating SME relocation to the US.
She said policy barriers are already stifling productivity in manufacturing and resource sectors, adding that a “double whammy” of carbon taxation and border adjustments leaves little room for reinvestment.
She added that the manufacturing and resource sectors remain among Canada’s most productive, but policy barriers are hurting national productivity and living standards.
Swift also raised alarm over the combined impact of an industrial carbon tax and a carbon border adjustment measure (CBAM), both supported by Carney.
She described this as a “double whammy” that raises costs for businesses and consumers while offering little room for reinvestment.
“If businesses were permitted to retain more revenue, they might be able to fund more climate measures, but this double hit is simply not sustainable,” she said.
Concerns over national unity have also surfaced.
According to Swift, Carney’s support for the emissions cap, West Coast tanker ban, and carbon pricing could worsen regional divisions.
She noted that “Alberta and Saskatchewan leaders are already rattling the sabres” and said Carney must act swiftly to ease those tensions.
Financial Post reports that union leaders have urged swift reforms in employment and public service delivery.
Labour leaders called for aggressive expansion of public investment, with the Canadian Labour Congress urging Employment Insurance reform and increased healthcare funding.
Unifor’s Lana Payne echoed the urgency, pledging to advocate for industrial protections in upcoming policy talks.
Marty Warren, Canadian national director of the United Steelworkers, called for more investment in sustainable infrastructure and policies that improve access to union representation.
The Canadian Chamber of Commerce, as reported in a statement by CEO Candace Laing, called for bold action to address economic headwinds. “It is time to go all-in and shift our paradigm.”
She urged the government to prioritise internal trade reform, business tax cuts, and long-term infrastructure investments.
“Our next steps cannot be incremental — nothing short of transformational will get us where we need to be,” Laing said.
According to Reuters, Carney’s Liberals retained power but fell short of a majority, complicating negotiations on trade and tariffs, particularly with the US.
Analysts and economists have offered mixed assessments. Anthony Visano of Kingwest & Co. said the situation remains fluid amid uncertainty over cabinet appointments and the outlook for NAFTA 2.0 negotiations.
Brian Madden of First Avenue Investment Counsel noted that Carney will need to balance experienced ministers with new voices to distinguish his leadership from that of his predecessor.
Stephen Brown of Capital Economics said that the need to secure support from opposition parties could lead to even looser fiscal policy than initially signalled.
Jimmy Jean and Randall Bartlett at Desjardins suggested that this configuration may favour social and cultural policy priorities over tax cuts and fossil-fuel development.
According to Scotiabank strategists Shaun Osborne and Eric Theoret, risk metrics for the Canadian dollar have remained stable, indicating limited market concern for now.
Still, Charu Chanana of Saxo warned that the outcome adds uncertainty at a time of rising recession risk and sensitive US trade relations.
“If there are two things investors don't like, it’s uncertainty and minority governments,” said Matt Simpson of City Index, summing up the mood among markets facing what he called a fragile policy runway for the next two years.
