Budget 2025: Key International Trade And Investment Highlights

On November 17, 2025, Canada's House of Commons adopted the government's long-awaited 2025 budget, initially tabled on November 4, 2025, as the Canada Strong Budget Act ("Budget 2025"). According to the government, Budget 2025 outlines a long-term investment strategy to build economic resilience, respond to global trade volatility, and address heightened U.S. protectionism.

Responding to U.S. Tariffs and Encouraging Growth

Budget 2025 dedicates significant resources to mitigating the effects of escalating US tariffs and trade disruptions.

Canada businesses have faced successive shocks caused by the imposition of 25%, then 35%, and now 45% tariffs on non-CUSMA originating goods by the United States, in addition to sector-specific tariffs on steel, aluminum, copper, and automobiles .

To offset these impacts, the government is establishing a $5 billion fund to be distributed over six years to help firms adapt, diversify, and maintain industrial capacity by offsetting new market access costs, supporting retooling, and securing new markets. It also includes a $1 billion fund for non-repayable contributions to business and a $10 billion financing facility for businesses and firms negatively affected by tariffs and by Canada's countermeasures. Workers are also included, with $3 billion over the next two years in direct support to workers – likely focused in sectors hit by the sectoral tariffs.

The Budget 2025 is also intended to create funds for diversification of trade in addition to the mitigation measures outlined earlier. These are intended to double Canada's non-US exports over the next decade to generate more than $300 billion in trade with non-US partners.

To achieve this, the federal government has proposed a suite of programs, including a $1 billion fund to support the steel industry in transitioning to new lines of business (with an additions $500 million from EDC to support small and medium sized steel enterprises), over $50 million in funding for trade missions and other services from the Trade Commissioner Service, over $68 million in financial supports and advisory services for small and medium enterprises (directly and through national industry associations) specifically for improving their export markets, $11 billion for trade related infrastructure and supply chain improvement, and additional funding for regional development agencies.

The mitigation and diversification programs are capped and represent limited pools of funding. As such, it is important for businesses to quickly and efficiently evaluated their needs, and how their future plans may fit within the proposed scope of the new programs. Delays may result in being left in the cold when it comes time for distribution of the funding. Experienced legal and advisory support will be essential to ensure that applications are properly structured, aligned with government priorities, and positioned for success.

Finance's Expanding Role in Sanctions

Since the Russia's further invasion of Ukraine in 2022, Canada has increasingly relied upon its autonomous sanctions regime, and in particular the Special Economic Measures Act ("SEMA"), as a foreign policy tool. The scope of prohibitions on dealings with sanctioned entities and their property has grown significantly, including through the implementation of ownership and control rules that extend these prohibitions to the property of non-listed entities owned or controlled by sanctioned persons.

Finance Minister to be consulted on certain sanctions measures

As part of what appears to be an effort to better calibrate the sanctions regime, Budget 2025 requires that the Minister of Finance be consulted before foreign financial institutions, central banks, payment service providers, stock exchanges or clearing and settlement systems are added to sanctions lists under SEMA.¹ This development is positioned as a measure for "Mitigating potential financial sector risks from sanctions"² and is intended to ensure that economic and financial stability considerations are integrated into Canada's sanctions regime.

It should be noted that this is limited to list-based sanctions prohibitions under the Special Economic Measures Act and situations involving the foreign financial service providers identified above, rather than all sanctions listings.

This additional level of oversight - having the Finance Minister assess the potential impacts on the financial sector before adding individuals or entities to the sanctions list - is welcome. Historically, sanctions have sometimes been imposed rapidly and without full consideration of downstream impacts in Canada. This has, at times, left financial institutions in the unenviable position of grappling with broad and sometimes vague restrictions. Requiring a second set of ministerial eyes in the decision-making process, and in particular those that are focused on Canadian economic and financial impacts, should help improve clarity and reduce unintended consequences.

New "Targeted Windfall Profit Charge" on federal financial institutions

Budget 2025 also signals a more aggressive approach to the expropriation of property and sanctions enforcement. It will permit establishing regulations requiring federal financial institutions to provide the Minister of Finance with information on property owned, held, or controlled by a sanctioned person that is in their possession or control.

While these entities are already generally required to report such property to the RCMP, CSIS, and/or FINTRAC, the proposed change aligns with a new power for the Minister of Finance to direct that any profits generated from these funds, such as accrued interest, be remitted to the Receiver General. This so-called "Targeted Windfall Profit Charge" is intended "to serve public policy objectives" and follows earlier amendments to Canada's sanctions legislation allowing the Minister of Foreign Affairs to seize and seek forfeiture of sanctioned person property in Canada. It will also be interesting to see how this is reconciled with the government's position that the frozen funds of sanctioned persons are not to be credited with interest (or debited with service fees or other charges).

New Financial Crimes Agency

Finally, Budget 2025 lays the groundwork for establishing a Financial Crimes Agency which would become Canada's lead enforcement agency for financial crimes – including sanctions enforcement. Under the proposed framework, the Minister of Finance will work with the Minister of Justice and the Minister of Public Safety to introduce legislation to establish this agency by Spring of 2026.

Legislative and Regulatory Amendments

Budget 2025 also introduces a series of legislative and regulatory changes with implications for trade and compliance. Collectively, these amendments aim to strengthen Canada's regulatory framework for trade and financial integrity:

• Customs Tariff: Amendments will allow duty drawback for goods donated to registered charities, provided they are used in charitable programs and not resold in Canada.
• Export and Import Permits Act: Proposed changes will allow the government to restrict the importation or exportation of items in response to actions of another country that harm Canada or to create more secure and reliable supply chains.
• AML/ATF Framework: Amendments to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and related regulations will:
• • Strengthen supervision, compliance, and enforcement
  • Increase penalties
  • Introduce a new compliance agreement framework
• Corporate Dissolution for Terrorist Entities: Amendments to the Canada Business Corporations Act and related statutes will allow quicker dissolution of corporations listed as terrorist entities under the Criminal Code.

Final observations

Budget 2025 projects a $78.3 billion deficit for 2025-26 and frames its spending commitments as necessary investments in economic resilience. As stated in Budget 2025 :

The government expects to collect $4.4 billion in tariff revenue and positions these measures as contributing to the overarching goal of giving to "industries and workers the tools they need to build a more resilient Canadian economy."

We will be keeping a keen eye on how these additional allocations are made, and any further updates the government provides regarding assisting companies with coping with current global economic climate, including any additional international trade and investment measures.

Footnotes

1. Budget 2025, Annex 5: Legislative Measures

2. Budget 2025, Annex 6: Impacts Report, page 44

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