To the Point for the Week of June 22, 2025
To the Point for the Week of June 22, 2025
Jet lag is the least of the Prime Minister’s worries now. Peel region takes leap of faith on reducing development charges on the hopes the province will stick to its word.
FEDERAL
Trade Talks Come to a Screeching Halt
Ottawa’s economic playbook was ripped up yesterday when President Trump abruptly terminated all trade talks with Canada, citing the government’s digital services tax on U.S. tech giants. New tariffs are promised within days. For a government that campaigned on urgent action and economic expertise, this isn’t just a setback—it’s a seismic blow to its core economic promise and a direct hit to the Canadian economy’s most critical relationship.
This announcement seemingly closes the door on a hoped-for deal and resets the entire policy clock. The government now faces all the classic stages of delayed economic response, but under a cloud of heightened uncertainty and risk. First, officials must quickly assess the scale and scope of the fallout – from lost export markets to the ripple effects on jobs and inflation. Next is the decision phase: crafting a credible response, whether through new supports for affected industries, diplomatic overtures, or domestic economic stimulus. Only then can implementation begin. As always, the real-world effects will take months (or longer) to reach Canadians, even as the pain from new tariffs and lost trade is felt immediately.
The economic backdrop was already precarious. Canada is forecast to enter a technical recession in Q2 and Q3 2025, with unemployment expected to rise to 7.3% by fall. Bill 5, the One Canadian Economy Act, received royal assent this week, but even in the best-case scenario, its benefits won’t potentially materialize until late 2025 or 2026. Now, with the U.S. slamming the door and new tariffs looming, the gap between policy action and economic relief will only grow wider and more severe.
This week’s G7 and EU-Canada summits were billed as moments for bold action, especially on trade. Instead, they delivered more familiar assurances than progress. The G7, hosted in Kananaskis, played out against a backdrop of a recalibrating global economy and another conflict in the Middle East. There were incremental wins for other nations and a G7 alignment on critical minerals, but no significant breakthrough for Canada. The much-touted 30-day window to negotiate tariff relief with the U.S. is now moot. The government’s most critical promise to secure a new economic and security agreement with the U.S., a core reason for the Liberals’ re-election, has flatlined.
On the domestic front, Carney’s government has touted new commitments on wildfire prevention, countering foreign interference, and support for Ukraine. These may boost Canada’s international profile but offer little in the way of concrete initiatives to bolster Canadians’ confidence in the economy or in their own financial footing. The launch of the G7 Critical Minerals Production Alliance and talk of securing supply chains and advancing technology could benefit Canadian mining and tech sectors down the road, but these are long-term plays with uncertain timelines.
The EU-Canada summit offered more substance on security, with a new defence partnership and a commitment to deepen cooperation on critical minerals, digital trade, and innovation. There was also the launch of talks on a Digital Trade Agreement and expanded industrial policy coordination. But on the economic front, the focus was on reinforcing existing frameworks like CETA (Canada-EU Trade Agreement). While the trade deal continues to deliver steady gains with bilateral trade up 65% since signing, there was no new progress on market access or relief from U.S. tariffs. Canadian firms will have more opportunity to participate in EU defence procurement and supply chains, but the main economic pain point with the United States remains unresolved and is now actively blocked.
For a party that sold Mark Carney as a brilliant economist ready to deliver results, these meetings didn’t produce much for Canadians itching for positive economic news. Most of the progress was incremental and long-term. The immediate message to Canadians is the same as before: trust the plan.
This is where the realities of timing traps become unavoidable. The Liberals spent months warning that only urgent action could address the trade crisis and economic headwinds. Now, with negotiations not just stalled but collapsed, the public is being told to wait while Ottawa reassesses, recalibrates, and prepares a response. That’s a tough sell when the economic data keeps getting worse. Recognition lag is already underway as officials scramble to assess the fallout. Decision lag will follow as the government debates its next move. Implementation lag, as always, means that even the best-crafted response will take months to filter through to jobs, investment, and household finances.
Meanwhile, the immediate reality for Canadians is deteriorating. Deloitte and other forecasters are calling for back-to-back quarters of negative growth, and the Bank of Canada’s own commentary points to a challenging second half of 2025. The unemployment rate is climbing. Business investment is forecast to drop sharply. The government is spending heavily. But much of it is being pushed through appropriations bills—not a comprehensive budget process. There are no promising proponents for nation-building resource projects. And there’s still little clarity on how the government actually defines what qualifies as one.
History makes clear just how dangerous delayed economic feedback can be to every day Canadians. In 2008, slow recognition and response to the global financial crisis left lasting political scars, even though Canada ultimately fared better than most countries. The lesson: being right in the long run doesn’t help if you’re wrong when it matters most. Today, Carney’s government faces a similar trap. Good economic policy often makes for bad politics in the short term, and delayed impact means governments pay the price for problems—in this case created by a predecessor—while getting no credit for the promised outcomes that haven’t materialized.
The bottom line is that Canadians are being asked for patience, but the economic pain will be immediate and the timeline for relief is long. The government’s ability to manage the gap between expectation and reality, between promise and delivery, will define the next year. The summits may have delivered new partnerships and more dialogue, but on the central economic file, the message to Canadians has shifted from “we’re working on it” to “don’t expect a breakthrough.” For households and businesses facing real strain, that’s a hard message to swallow. It’s also one that carries real risks if the lag between policy and impact grows any wider.
MUNICIPAL
Peeling Back Development Charges
After months of rising tension and political theatrics, Peel Region has sent a shockwave through Ontario’s development world. The conflict peaked on June 13, when Brampton and Caledon councillors walked out of a Peel Regional Council meeting in protest of Mississauga Mayor Carolyn Parrish’s motion to slash development charges, a move she argued was essential to jumpstart housing construction and tackle the region’s affordability crisis. The walkout forced an adjournment and laid bare Peel’s widening internal divide.
With tempers cooled, the issue returned to the table the following week. Council ultimately approved a 50% reduction in residential development charges, with a framework to review the policy annually and tie future reductions to affordable housing benchmarks. It marks a sharp departure from Peel’s long-standing approach, which has historically maintained some of the highest development fees in the GTA.
Mayor Parrish positioned herself as a champion for affordability, backed by several Mississauga councillors and housing advocates who packed the public gallery. Brampton Mayor Patrick Brown, meanwhile, warned that slashing fees could jeopardize funding for critical infrastructure like roads, water, and transit. Caledon councillors echoed concerns about Peel’s financial capacity to manage rapid growth.
The new policy takes immediate effect and includes a task force made up of municipal staff, developers, and housing advocates to monitor the impact and recommend further changes. Critics warn of budget shortfalls and delayed infrastructure upgrades, but supporters argue the move is a necessary response to an unprecedented housing crunch. The decision has caught the attention of municipal leaders across the province, just as Vaughan’s similar move did months earlier.
The stakes are high. Internal government documents now show Ontario will need more than two million new homes by 2035 to meet demand and restore affordability. Yet high construction costs and regulatory delays continue to choke off supply. Housing starts are falling, construction jobs are vanishing, and the Building Industry and Land Development Association (BILD) is warning of deeper economic pain if the trend continues.
That’s what makes Peel’s move so significant. By lowering one of the most stubborn cost drivers in the system, the region is taking direct aim at the affordability gap and sending a clear signal to developers that it’s serious about getting shovels in the ground. If this helps stabilize construction jobs and unlock stalled projects, it could become a blueprint for other municipalities under pressure.
Mayor Brown and Caledon Mayor Annette Groves ultimately backed the policy shift, but only after receiving a letter from the province committing $1.4 billion in infrastructure funding to backfill the lost revenue. Even so, many Peel councillors remain uneasy with the lack of detail and assurances in the provincial letter. They’re gambling that the development industry’s influence at Queen’s Park will help secure a long-term commitment.
Some see the province’s letter as a calculated stall designed to incentivize municipalities to drop fees while it races to build a new framework for infrastructure financing. That could include a municipal services corporation model or a broader utility-style approach. There’s also speculation the Build Ontario Fund could help bridge the gap. The board is in place, the CEO and early staff are hired, and work is underway on a handful of provincially significant projects. But with just two files under its belt, its role in large-scale infrastructure remains more promise than proof.
Private capital is also expected to play a key role in any future model, with the province looking to shift the cost burden away from taxpayers and end users. If done right, this could provide much-needed relief to builders and inject stability into a volatile housing market. But timing is everything. If the province can’t stand up a new model quickly, it risks missing the moment and falling further behind in the race to fix Ontario’s housing shortage.
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