B.C.’s 2025 budget responds to U.S. tariffs with spending; deficit to hit $10.9B

On the same day the United States implemented tariffs on all Canadian goods being imported into that country, the British Columbian government handed down its 2025 budget.

Tabled in the Legislature on Tuesday afternoon, B.C.’s 2025 budget is a direct response to the assumed impacts that the U.S. tariffs will have on Canadians, and more specifically, British Columbians.

“We are introducing this budget during the most consequential time in B.C. in generations,” Finance Minister Brenda Bailey said. “A time that few of us could have imagined a few months ago.”

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The province says the budget is “a measured plan to protect jobs and public services that people rely on, while preparing British Columbia’s economy to withstand the unpredictable impacts of unjustified tariffs.”

“While our economy is built to withstand the threat of U.S. President Donald Trump’s tariffs relatively better than most other provinces, the impact would still be significant. Our budget prepares us to carefully navigate these uncharted waters so we can put people first and support businesses as we build a stronger, more self-sufficient future,” Bailey said.

“Budget 2025 is about standing strong for B.C. and making sure public services are there when we need them. Now is the time to focus on what really matters to our communities and the people of our province.”

As the impacts to B.C. from the U.S. tariffs are challenging to predict, the Ministry of Finance assumed four “base case” scenarios to produce this year’s budget: a 10 per cent U.S. tariff on energy products and a 25 per cent tariff on all other goods; partial retaliation by Canada; interest rate cuts and federal government supports; and tariffs will remain in place until at least 2029.

“The uncertainty makes it difficult for the province to predict the precise impact of tariffs, as well as what measures may be required to help people and businesses,” the finance ministry said. “The province remains ready to respond to any scenario and defend British Columbians from these threats, protect jobs, and the services people rely on.”

The ministry has revised down some of the expected major impacts of the U.S. tariffs on B.C., with expected job losses now sitting around 45,000 by 2029, down by almost two-thirds from the expected 124,000 by 2028 in the government’s last fiscal update on Jan. 16.

The province is also expecting a lower cumulative loss for real GDP – $43 billion by 2029 instead of the previously expected $69 billion by 2028. With all this in mind, B.C. is expecting a 1.8 per cent increase in real GDP in 2025 and staying essentially flat at 1.9 per cent in 2026.

But with the revised losses and an increase in spending comes a higher deficit and rising debt-to-GDP ratio. In 2025, B.C. is expected to hit a deficit of $10.9 billion – up around $1.8 billion since the end of 2024 – the largest in provincial history. Next year, the province expects revenue streams to collect $84 billion, with expenses rising to $94.9 billion.

While the province’s three-year plan shows the deficit reducing yearly through 2028, the debt-to-GDP ratio is expected to rise from 22.9 per cent to 34.4 per cent. However, B.C. will remain with one of the lowest ratios compared to other major provinces. According to the ministry, Quebec and Ontario will be operating at a 39.8 per cent and 37.9 per cent debt-to GDP ratio, respectively. Meanwhile, at a federal level, Canada will operate at a level of 41.7 per cent.

Real impact of U.S. tariffs on B.C. yet to be determined

The province acknowledged that there are key risks to its fiscal plan. These include uncertainty with global trade policies, immigration levels, and corresponding population growth; weaker global economic activity and ongoing conflicts around the world; and an increase in costs and demand for government services, such as health care, social programs, and disaster recovery. However, the province shared that it has built in $4 billion-worth of contingencies in each year of its fiscal plan to address these risks – a total of $12 billion.

“The results of the Budget 2025 scenario are less severe than the Jan. 16 assessment, in part because the tariff assumptions are lower and because the budget base case incorporate other economic changes since the fall 2024 fiscal update,” the ministry said. “However, combined, these changes could result in provincial revenue losses of $1.7 billion to $3.4 billion annually if tariffs come into force.”

“This is more than the budgets for most B.C. ministries, except for health, education, and social services,” it added. “Tariff impacts could be more significant depending on what policies are implements, if federal support is less than assumed, if Canada’s retaliation escalates, and if U.S. tariffs are stacked, resulting in even higher tariffs.”

The province explained that over the last 25 years, it has reduced its reliance on the U.S. as a trading partner, with its share of exported goods dropping to 52.8 per cent in 2024 compared to more than 65 per cent in 2000.

“In comparison, around 88% of Alberta’s goods exports and an average of 76.1% of Ontario and Quebec’s goods exports went to the U.S. in 2024. This places B.C. in a relatively better position than other provinces when it comes to mitigating the impacts of U.S. tariffs. However, the impact would still be significant,” it said.

However, some industries and sectors of B.C.’s business community will be hit harder than others. “For example, in 2024, B.C. exported all of its natural gas and electricity and 74.8% of its softwood lumber to the U.S.,” the ministry states.

B.C. set to spend $95 billion in 2025 to shore up vulnerabilities

Speaking Tuesday, Bailey explained that the 2025 budget plans to protect its major ministries – health, education, and social services – from any potential impact from the U.S. tariffs.

As such, the province says it is investing in critical public services to meet growing demand. This includes “$9.9 billion more in operating funding over three years, including $7.7 billion in new funding for health care, education and social services.”

It also includes $4.2 billion in to respond to growing demand for health care services, improving access to primary care, and to continue hiring more health-care workers. It also covers a plan to reduce emergency room wait times, open and operate new and renovated hospitals, and provides funding for addictions treatment and recovery programs.

“In times of uncertainty, we will be there for British Columbians. We are continuing to invest in the services people rely on to take care of their families, get the care they need, when they need it, and provide a good future for everyone across the province,” Bailey said.

“Our government is focused on building an economy that creates the wealth that is needed to deliver more jobs with bigger paycheques, and protect our public services in the face of the threat of unjustified tariffs,” she added.

The province is set to spend $15.5 billion over the next three years to build and upgrade hospitals, including the new Surrey Hospital and BC Cancer Centre and new Surrey Memorial facilities, and long-term care facilities.

B.C. will also invest $45.9 billion over the next three years in capital projects which it says will support 180,000 “good paying direct and indirect jobs.” Amongst other measures, the province is also streamlining the reviewing and permitting of major natural-resources projects, which it says is worth $20 billion and supports approximately 8,000 jobs.

The ministry said it’s pulling together a “broad coalition of allies” to strengthen the economy, to continue to diversify the market, and respond as “Team Canada.” These measures include a trade and economic security task forces and the premier’s task force on agriculture and food economy.

“B.C. is taking a whole-of-government approach to defend B.C.’s workers, businesses, economy, and to protect the services people rely on,” the ministry stated.

Retreating from challenges will only weaken B.C.: finance minister

Bailey ended her budget presentation with a rousing speech in the Legislature, affirming to British Columbians that the “bright future will be one of our own making.”

“When faced with big challenges, there are those who might say we should retreat and respond by cutting spending on the public services that people rely on,” she said.

“But we know that this would only weaken the services we all need and drive up costs for people when they can least afford it.”

Bailey said the challenging and uncertain times “invite” people to reflect on what matters most – health, happiness, and stability and safety.

“There is so much happening in the world right now that is beyond our control. But what is within our control is how we take care of people. How we make our communities safer, stronger, and healthier. How we build a world-class education system to prepare our kids for a fast-changing workforce. And how we build a more resilient, diversified economy that works for everyone,” she said.

“These are the things that this budget commits to. We are going to get through this storm stronger, together. We will build a better B.C. no matter who occupies the White House.”