Matt Spoke: Canada can turn Trump’s tariffs from an economic crisis to a golden opportunity—here’s how

As we anticipate a new round of tariffs from the Trump administration, there’s a growing urgency for a domestic policy agenda that protects jobs and attracts investment.

In the face of a high tariff wall to access the U.S. market, Canadian firms will indeed be incented to jump over it by shifting their production across the border. The risk of capital flight could be significant. Canada, therefore, needs an ambitious policy to offset those incentives.

One idea: Transform Canada into the world’s most competitive tax environment. In particular, our next prime minister should cut the federal corporate income tax rate from 15 percent to 5 percent, and encourage provinces to cut their own rates by 5 percentage points. The result would be an average combined corporate tax rate of roughly 10 to 12 percent, which would make Canada the most attractive jurisdiction for investment in North America.

Provincially, Ontario—Canada’s largest economy and home to our struggling and targeted auto sector—should lead the charge. Premier Doug Ford’s recent majority election win gives him a strong mandate to back this move. After pitching Ontario as “open for business,” Ford now has a chance to deliver on that promise with a tax cut that would cement Ontario’s status as a global business hub while helping to protect key automotive manufacturing investments in the province at the same time.

Why cut corporate taxes? 

The economic case is clear: lower corporate taxes attract investment, create jobs, and drive prosperity. When Ireland cut its corporate tax rate from 24 percent to 12.5 percent in the early 2000s, its economy tripled in size, transforming it into a global powerhouse. Canada can follow the same playbook.

Reducing Canada’s federal rate to 5 percent, combined with complementary provincial cuts, would give us one of the lowest headline corporate tax rates among advanced economies. We’d immediately become one of the cheapest places to do business in the developed world. Today, Ontario’s combined corporate tax rate (26.5 percent) leaves us behind U.S. states like Texas (21 percent) or Ohio (21 percent). And while those rates are competitive, Canada must go further in response to Trump’s trade war and its potential to cause capital and production flight out of the country.

A combined federal-provincial rate of roughly 10-12 percent would not only be a defensive measure, but it also has the potential to make Canada a magnet for global businesses fleeing higher-tax jurisdictions, from the U.S. to Europe. At a time when Trump’s tariffs threaten to cripple our economy, a bold tax cut would send a clear message: Canada aspires to be the best place to invest, hire, and grow.

These tax cuts would supercharge Canada’s economy and massively boost economic output, creating hundreds of thousands of jobs and raising wages.

Of course, critics will point to the potential loss of corporate tax revenues. But as long as the reductions are clearly communicated and committed to, they can be phased in over several years—giving the economy time to grow and offset the shortfall. As businesses invest and expand, the economic growth will lead governments to collect more from sales taxes, property taxes, and personal income taxes. There would, in other words, be dynamic benefits that would minimize the revenue losses.

Texas and Florida offer clear evidence that low corporate taxes don’t just help businesses in general and big businesses in particular—they benefit everyone. Job creation, wage growth, and new investment fuel a rising tide that lifts all boats.

Why now?

If Canada fails to act, we risk falling behind. Trump’s tariffs have already prompted Stellantis to pause key operations in Ontario, and other companies could follow if we don’t improve our competitive edge. Meanwhile, U.S. states with lower taxes (and other incentives) continue to attract investment.

The next federal government has a chance to transform Canada’s economy by turning this crisis into an opportunity. Ontario should lead by example—but this must be a national project. Together, we can build a more dynamic, resilient economy that attracts global businesses, creates jobs, and delivers prosperity for all Canadians.

The time to act is now.