Alberta, Canada’s top oil-producing province, has forecast a C$5.2 billion ($3.5 billion) budget deficit for the 2025/26 fiscal year, citing potential U.S. tariffs as a major threat to government revenues and economic growth.
This marks a sharp reversal from Alberta’s current fiscal surplus of C$5.8 billion, highlighting the uncertainty facing policymakers as they navigate the evolving trade landscape.
Finance Minister Nate Horner acknowledged the difficulty in planning a budget amid unpredictable U.S. policies. “How do you plan for a budget when there are so many unknowns?” he told reporters, referencing uncertainty around U.S. President Donald Trump’s trade stance.
The province estimates 2025/26 revenue at C$74 billion, C$6.6 billion lower than the C$81 billion projected for 2024/25, largely due to weaker oil prices and reduced royalties.
Alberta’s GDP growth is expected to slow to 1.8% in 2025 and 1.7% in 2026, down from 3% in 2024. The province also forecasts deficits of C$2.4 billion in 2026/27 and C$2.0 billion in 2027/28.
Alberta’s budget assumes a “moderate” U.S.-Canada trade conflict, with tariffs averaging 15% on most goods and 10% on oil—a scenario it believes is more realistic than the 25% tariffs Trump has proposed on all non-oil Canadian goods.
Horner emphasized that Alberta has no inside knowledge of U.S. plans, adding that the province is making its “best and most reasonable guess.”
If Trump’s proposed 25% tariffs on all non-oil goods were fully implemented, Alberta warns the deficit could rise to C$8.7 billion in 2025/26. However, if no tariffs are imposed, the deficit would shrink to C$2.9 billion.
Alberta, home to the world’s third-largest crude reserves, expects oil prices to remain under pressure due to trade tensions.
The discount on Canadian heavy crude versus U.S. WTI benchmark crude is projected to widen from $13.20 per barrel in 2024/25 to $17.10 in 2025/26.
While Alberta’s energy sector is expected to remain resilient, thanks in part to a weaker Canadian dollar, other industries—including agriculture and manufacturing—are likely to suffer greater impacts. Consumer spending is also expected to slow.
To prepare for economic volatility, Alberta is doubling its contingency fund from C$2 billion to C$4 billion, allowing greater flexibility in responding to financial uncertainties.
As Canada braces for potential trade disruptions, Alberta’s latest budget reflects both the risks and strategies the province is considering to safeguard its economy.
