On the day U.S. tariffs on Canada took effect, the B.C. government tabled its 2025 budget, pledging to fight back against the tariffs. The province enters a trade war with a budget featuring a contingency fund, spending cuts, and a nearly $11 billion deficit.
The province’s 2025 budget comes during “the most consequential time in B.C. in generations,” Finance Minister Brenda Bailey said in her March 4 budget speech, adding that her government recognizes the importance of balancing the budget in the long term, “but never at the expense of the services people rely on every day.”
“This is not about doing less,” she said.
The province is setting aside $4 billion in its annual contingency fund for “unpredictable costs,” including the impact of U.S. tariffs, which could reduce provincial revenue by up to $3.4 billion per year, according to the budget.
As tariffs took effect, the B.C. government ordered the removal of all products from Republican states from government-run liquor stores, and announced that all government purchases would exclude U.S. products.
In addition to countermeasures, the province says it plans to diversify its trade markets and expedite projects to create more jobs.
Spending Cuts and Deficit
The province projects expenses of $94.9 billion in 2025–2026, which it says will support programs and services residents rely on, while “helping people with costs and building a stronger economy.” Revenue is projected to reach $84 billion and expected to increase over the following two years due to higher tax revenues from population growth, economic activity, and increased natural resource revenues.
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Meanwhile, this fiscal year’s deficit is projected at $10.9 billion, nearly $2 billion higher than last fiscal year’s updated shortfall of $9.1 billion. However, the deficit is projected to decrease over the following two years but will remain above last year’s level.
The province plans to cut spending by reviewing all government programs, pausing public service hiring, and reducing non-essential administrative and operational costs, including travel, consulting contracts, and business expenses. “With the uncertainty we’re facing due to international threats to our economy, it’s important that we take a close look at our spending,” Bailey said in her budget address.
Those measures would cut spending by $300 million in the 2025–2026 fiscal year, and by double that amount in each of the following two years, according to the budget.
The B.C. New Democratic government last month abandoned its election campaign promise of a $1,000 rebate to residents, citing the need for cost savings amid a potential trade war.
Taxpayer-supported debt is estimated to reach nearly $119 billion in the 2025–2026 fiscal year, an increase of more than $20 billion from last year.
This debt is further expected to increase to more than $166 billion by 2027–2028, “as the Province continues to invest in strengthening services and building more schools, hospitals, roads, bridges, transit and housing,” reads the document.
The provincial government called its 2025 budget a “measured plan to protect jobs and the public services people rely on, while preparing British Columbia’s economy to withstand the unpredictable impacts of unjustified tariffs.”
B.C. Opposition Conservative Leader John Rustad criticized the budget, arguing it provides neither significant tax relief for residents nor a “substantive plan on tariffs” or measures to address interprovincial trade barriers, all while running a “record setting deficit” and raising B.C.’s carbon tax.
“The NDP never planned on axing the carbon tax, they never planned on giving you the $1000 they promised, and they never planned on returning BC to balanced budgets,” Rustad said on March 4 .
In its budget, the province says it is aligning with the federal carbon tax pricing requirements, with the rate set to rise from $95 to $125 per tonne between 2025–2026 and 2027–2028.
Health and Education
The budget earmarks $4.2 billion over three years to increase capacity in the health system, and an additional $15.5 billion in capital investments for new health facilities over the same period. Meanwhile, mental health and addiction services will receive $500 million in funding, also over three years, for addictions treatment and recovery programs, the province says.
Investments in kindergarten to Grade 12 education amount to $370 million over three years, with capital investments of $4.6 billion over the same period. Post-secondary education and skills training will receive slightly larger funding at more than $700 million over three years, with a capital funding of $4.7 billion.
The province is also allocating $36 million toward “critical language preservation and revitalization” to meet what it describes as a growing demand for First Nations language instruction “as well as support learners and jobs for expert speakers, particularly Elders and First Nations women.” The funding is part of a $45 million investment over three years for the First Peoples’ Cultural Council.
