Canada Scraps Capital Gains Tax Hike; US-Canada Trade Tensions Rise Over Tariffs

Canada's plan to increase the capital gains inclusion rate has been abandoned following Mark Carney's victory in the Liberal leadership race. The proposed change, intended to tax wealthy Canadians and corporations more, would have raised the inclusion rate to two-thirds from the current 50%. While the policy is dead, experts note that it has already caused confusion among taxpayers. Meanwhile, trade tensions between the U.S. and Canada have escalated. President Trump initially imposed a 25% tariff on Canadian goods, leading Ontario to levy a surcharge on electricity exports to the U.S. Trump responded by doubling tariffs on Canadian aluminum and steel to 50%. Ontario Premier Doug Ford then removed the surcharge, and Trump indicated he might reduce the steel and aluminum tariffs back to 25%. Incoming Canadian Prime Minister Mark Carney stated that Canada would maintain retaliatory tariffs until the U.S. commits to fair trade.