The 2025 federal budget plots a path for the Canadian economy to emerge from the current crisis. But it also highlights just how deep a hole the economy is in right now and how small the margin for error is as Canada navigates the perils of a trade war.

“This budget must be generational in its ambition and serve to shape our economy and our nation’s future,” said Finance Minister François-Philippe Champagne. “There is no place for withdrawal, ambiguity or even standing still; only for bold and swift action.”

The budget lays out various scenarios for economic growth over the next five years. The so-called upside scenario envisions a world in which U.S. tariffs are rolled back and global trade works its way back to normal.

Under the “downside scenario,” the Canadian economy would contract

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