November 6, 2026
SUMMARY
Federal Budget 2026, released on November 5, focuses on strengthening Canada’s economy amid ongoing U.S. trade uncertainty. The budget introduces new investment incentives and builds on existing commitments to infrastructure, industrial development, electricity and workforce training. These measures could create opportunities for Ontario’s industrial, commercial and institutional (ICI) construction sector.
ECONOMIC OUTLOOK
Canada’s real GDP is projected to grow by 1.0% in 2026 and 1.7% in 2027. Inflation is expected to ease from 2.8% in 2026 to 2.2% in 2027, while unemployment is forecast to average 6.6% in 2026.
The federal deficit is projected at $62.3 billion in 2026–27, down from the $65.3 billion forecast in the Spring Economic Update. Federal capital investment is expected to increase from $37.4 billion in 2025–26 to $78.2 billion by 2030–31.
RESPONDING TO U.S. TARIFFS
The budget acknowledges continued trade pressures, particularly in Canada’s steel, aluminum and automotive industries. However, the government reports that several tariff-affected industries have begun to stabilize. Goods exports to non-U.S. markets are now more than 50% above their 2024 average in nominal terms, supported partly by higher commodity prices and efforts to diversify trade.
As per the government, nearly $44 billion in tariff-related support, including $20.6 billion for industry adaptation, $12.9 billion in business financing and $10 billion in worker assistance.
Recent and new measures include:
- $6.1 billion in additional support announced for Ontario’s steel, automotive and critical minerals industries.
- $6.6 billion for trade diversification and infrastructure, expected to support approximately 4,800 construction jobs annually.
- $170 million in new funding for 2027–28 to support workers affected by trade disruptions through employment and training services.
The government is also advancing its existing Buy Canadian procurement policy, encouraging greater use of domestic materials and suppliers in federal projects.
KEY CONSTRUCTION-RELATED MEASURES
Public Infrastructure: The budget builds on the previously announced $51 billion Build Communities Strong Fund, supporting hospitals, schools, transportation, water systems and other public infrastructure. It also proposes $1.5 billion within the fund for constructing, expanding and rehabilitating recreational facilities and ice rinks. The broader fund is expected to support approximately 42,000 jobs annually.
Electricity and Major Projects: The budget advances the existing National Electricity Strategy, representing more than $50 billion in investment, with additional support for electricity generation and transmission. It also proposes extending the Clean Technology and Clean Electricity investment tax credits to 2040. Major Ontario projects identified include the Darlington New Nuclear Project and Canada Nickel’s Crawford Project.
Industrial Development: The budget advances strategies including $9 billion for automotive transformation, $7.7 billion for defence industrial development and additional critical minerals funding. The recently announced Productivity Mega Deduction, advanced through Budget 2026, would reduce the marginal effective tax rate on new business investment from 13% to 6.4%, encouraging investment in qualifying equipment, technology and other capital assets.
Skilled Trades: The government is building on its previously announced $6 billion Team Canada Strong initiative, aiming to recruit, train and hire up to 100,000 Red Seal workers by 2030–31. Commitments include $430 million for the Union Training and Innovation Program, apprenticeship support and improvements to labour mobility.
IMPLICATIONS FOR ONTARIO’S ICI CONSTRUCTION SECTOR
The budget could support Ontario’s construction sector through investments in public infrastructure, manufacturing, electricity generation and major industrial projects.
Support for tariff-affected industries and Buy Canadian procurement could benefit domestic manufacturers and suppliers, while investment incentives may encourage industrial expansion. Skilled trades initiatives could also help address workforce shortages.
However, the timing and scale of construction activity will depend on project approvals, funding arrangements and private-sector investment decisions.
Overall, Budget 2026 signals continued federal support for infrastructure and industrial development, creating potential opportunities for Ontario’s ICI construction sector.
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FOR MORE INFORMATION, CONTACT:
Gargi Bharti
Economic and Research Project Lead
Ontario Construction Secretariat (OCS)
180 Attwell Drive, Suite 360, Toronto, ON M9W 6A9
P 416.620.5210
gbharti@iciconstruction.com
