Ottawa’s capital gains tax hike—final nail in ‘business investment’ coffin

From 2014 to 2022, inflation-adjusted total business investment (in plants, machinery, equipment and new technologies but excluding residential construction) in Canada declined by C$34 billion. During the same period, after adjusting for inflation, business investment declined by a total of $3,748 per worker

According to the recent federal budget, the Trudeau government plans to increase the inclusion rate from 50 per cent to 66.7 per cent on capital gains over $250,000 for individuals and on all capital gains realized by corporations and trusts. Unfortunately, this tax hike will be the final nail in the coffin for business investment in Canada, which likely means even harder economic times ahead.

Canada already faces a business investment crisis. From 2014 to 2022, inflation-adjusted total business investment (in plants, machinery, equipment and new technologies but excluding residential construction) in Canada declined by C$34 billion. During the same period, after adjusting for inflation, business investment declined by a total of $3,748 per worker—from $20,264 per worker in 2014 to $16,515 per worker in 2022.

While business investment has declined in Canada since 2014, in other countries, including the United States, it’s continued to grow. This isn’t a post-COVID problem—this is a Canada problem.

And Canadians should be worried. Businesses investment is key for strong economic growth and higher living standards because when businesses invest in physical and intellectual capital they equip workers with the tools and technology (e.g. machinery, computer programs, artificial intelligence) to produce more and provide higher quality goods and services, which fuels innovation and higher productivity. And as firms become more efficient and increase profits, they’re able to pay higher wages, which is why business investment remains a key factor for higher incomes and living standards.

The Trudeau government’s policies—increased regulation, particularly in the energy and mining sectors (which makes Canada a relatively unattractive place to do business), higher and uncompetitive taxes, and massive federal deficits (which imply future tax increases)—have damaged business investment.

Unsurprisingly, weak business investment has correlated with a weak economy. In the fourth quarter of 2023, real economic growth per person ($58,111) officially fell below 2014 levels ($58,162). In other words, Canadian living standards have completely stagnated. In fact, over the last decade economic growth per person has been the weakest on record since the 1930s.

Instead of helping fix the problem, the Trudeau government’s capital gains tax hike will further damage Canada’s economy by reducing the return on investment and encouraging an exodus of capital from the country. Indeed, capital gains taxes are among the most economically-damaging forms of taxation because they reduce the incentive to invest.

Once again, the Trudeau government has enacted a policy that will deter business investment, which Canada desperately needs for strong economic growth. The key takeaway for Canadians? Barring a change in policy, you can expect harder times ahead.

Authors:

Tegan Hill

Associate Director, Alberta Policy, Fraser Institute

Jake Fuss

Director, Fiscal Studies, Fraser Institute

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Trump announces UK will fast-track American products under new deal

Published on May 8, 2025

Todayville

MxM News

Quick Hit:

President Donald Trump on Thursday announced the framework of a new trade agreement between the United States and the United Kingdom, calling it a breakthrough that will eliminate red tape and fast-track American exports.

Key Details:

President Trump told reporters the UK would be “opening up the country” to American goods, particularly U.S. beef and other agricultural exports.
Although the current 10% tariff rate on the UK will remain, the agreement offers Britain some flexibility on imports like auto parts and aircraft components while laying the foundation for an “economic security agreement.”
Trump emphasized that the UK has agreed to speed up the customs process for American products: “There won’t be any red tape—very fast approvals.”

🚨 A GOOD DEAL 🚨

President Trump announces the first breakthrough trade deal between America and the United Kingdom. ⬇️ pic.twitter.com/pesMdQlCMY

— The White House (@WhiteHouse) May 8, 2025

Diving Deeper:

President Donald Trump on Thursday revealed that the United States and the United Kingdom have finalized the framework for a new bilateral trade deal, marking the first formal economic pact since his administration’s imposition of “Liberation Day” tariffs last month. Speaking from the Oval Office, Trump said the deal would ease trade barriers and accelerate customs clearance for American exports, with a particular focus on agricultural products like beef.

“They’ll also be fast-tracking American goods through their customs process, so our exports go to a very, very quick form of approval, and there won’t be any red tape,” Trump said. While a 10% tariff on British goods remains in place, the agreement grants London some relief on imports of automobile and aircraft components and extends an invitation to join a broader “economic security agreement.”

Prime Minister Keir Starmer joined the announcement via speakerphone and praised the negotiating team for their work. “This has been under discussion for weeks,” Starmer said, highlighting the roles of Commerce Secretary Howard Lutnick and U.S. Trade Representative Jamieson Greer in brokering the deal.

The announcement underscores the growing rapport between Trump and Starmer, who previously met at the White House on February 27th. While the final terms of the deal are still being worked out, the Trump administration has positioned this framework as a significant win in its broader push to restructure global trade in favor of American producers.

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Global trade reorder begins in Trump deal with United Kingdom

Published on May 8, 2025

Todayville

From The Center Square

By Brett Rowland

Seeking to reorder global trade with America at the center, President Donald Trump announced the framework of a trade deal with the United Kingdom on Thursday.

Prime Minister Keir Starmer, since 2024 leader of a nation that maintains a special relationship with the U.S. including a more even trade balance than with other countries, spoke with the president by phone during an Oval Office meeting Thursday morning.

“This is turning out to be a great deal for both countries,” Trump said.

The 78-year-old second-term Republican president said the deal would improve market access for U.S. products in the United Kingdom, and improve the relationship between the two countries. Trump said it was the first of many deals from his trade team.

The 62-year-old leader of the Labour Party said the deal would create new jobs in both nations.

“We can finishing ironing out some of the details, but there’s a fantastic platform here,” Starmer said, calling the deal “historic.”

Commerce Secretary Howard Lutnick said the U.S. has balanced trade with the United Kingdom. Lutnick said it would add $5 billion in market access to the U.S. Lutnick said the United Kingdom would get a 10% tariff on 100,000 automobile imports to the U.S., lower than the 25% tariff on foreign autos for other nations.

Lutnick said the lower tariff would protect jobs in the UK.

On social media, Trump wrote, “Today is an incredible day for America as we deliver our first Fair, Open, and Reciprocal Trade Deal – Something our past Presidents never cared about. Together with our strong Ally, the United Kingdom, we have reached the first, historic Trade Deal since Liberation Day. As part of this Deal, America will raise $6 BILLION DOLLARS in External Revenue from 10% Tariffs, $5 BILLION DOLLARS in new Export Opportunities for our Great Ranchers, Farmers, and Producers, and enhance the National Security of both the U.S. and the UK through the creation of an Aluminum and Steel Trading Zone, and a secure Pharmaceutical Supply Chain. This Deal shows that if you respect America, and bring serious proposals to the table, America is OPEN FOR BUSINESS. Many more to come — STAY TUNED!”

Trump announced a slate of higher tariffs on foreign nations on April 2, which he dubbed “Liberation Day” for American trade. On April 9, Trump paused those higher rates for 90 days to give his trade team time to make deals with other countries.

When Trump temporarily suspended the higher tariffs on April 9, he kept a 10% baseline tariff in place along with a 25% import duty on foreign autos and auto parts. He also kept 25% tariffs on foreign steel and aluminum.

Trump also imposed 145% tariffs on China, which retaliated with 125% tariffs on U.S. goods. Those tariffs remain in place, although the two nations are set to begin talks this weekend.

Economists, businesses and many publicly-traded companies have warned that tariffs could raise prices on a wide range of consumer products.

Trump has said he wants to use tariffs to restore manufacturing jobs lost to lower-wage countries in decades past, shift the tax burden away from American families, and pay down the national debt.

A tariff is a tax on imported goods. The importer pays the tax and can either absorb the loss or pass the cost on to consumers through higher prices