Carney's cabinet meets for the first time as it stares down a pile of problems

Prime Minister Mark Carney's newly constituted cabinet met for the first time Wednesday on Parliament Hill as the government grapples with a whole host of challenges it will be charged with fixing.

The new ministry has three distinct challenges, among others, bubbling up on its watch: a U.S. trade war that's already having an impact on Canada's sluggish economy, persistent consumer affordability challenges and restlessness in Western Canada over the future of natural resources development.

To address cost-of-living concerns, Carney said cabinet's first order of business is directing Finance Minister François-Philippe Champagne to immediately draw up the legislation to pass what the government is calling a middle-class tax cut — a change that will save two-income families up to $825 a year.

"We're acting on affordability as we look to build up this economy," Carney said as he signed a "decision note" on the issue in front of the cameras in the cabinet room, not unlike how U.S. President Donald Trump has signed executive orders in the Oval Office.

Champagne said the tax cut will be introduced soon after Parliament returns later this month, and other initiatives will be outlined in the forthcoming speech from the throne — but there will be no budget until the fall, he said.

The last Liberal government's much-touted electric vehicle (EV) manufacturing strategy is also on shaky ground after Honda announced it will halt its multi-billion-dollar investments in this country — joining a growing list of indefinitely delayed, stalled or potentially failed Canadian EV projects amid tepid consumer demand for these vehicles and Trump's punishing tariffs on foreign-made autos.

Mélanie Joly, who moved from foreign affairs to industry in Tuesday's shuffle, said she will be fighting for autoworkers when she speaks to the head of Honda later today. "We'll make sure we're in solution mode," she said.

Carney also faces Western discontent with Alberta's premier Danielle Smith saying there needs to be a "reset" with how Ottawa treats provinces like hers after the perceived hostility of the last government. In the days since the federal election, Smith has said she will lower the threshold for referendums, potentially including one on Alberta sovereignty.

Smith's chief of staff is also raising red flags about Carney's new Toronto-area environment minister Julie Dabrusin, who says on her MP website she has "taken a strong stance against oil sands expansion," something she framed as a virtue.

One of former prime minister Justin Trudeau's former environment ministers, Steven Guilbeault, also seemed to pour cold water on expanding pipeline capacity Wednesday — although that's not really a decision for him to make now that he's in charge of Canadian culture and identity under Carney.

The prime minister himself has said he's open to approving major infrastructure, including conventional energy projects such as pipelines.

"There are no investors, no companies that are saying they want to build an east-west pipeline right now," Guilbeault told reporters ahead of the cabinet meeting, noting it will be industry that builds one, not the government.

WATCH: Guilbeault: 'As far as I know' no companies want to build east-west pipeline:

Minister of Canadian Identity and Culture Steven Guilbeault was asked about comments from Alberta Premier Danielle Smith, who has labelled him as anti-pipeline. Guilbeault said Wednesday the TransMountain pipeline is being used at 40 per cent capacity, but the company reported late last year it was using more than 75 per cent.

"We bought a pipeline and that's only used right now at about 40 per cent capacity. Maybe we should maximize the use of existing infrastructure," the former environmental activist turned politician said.

It's not clear where Guilbeault got that 40 per cent usage figure. As of late last year, the company itself was reporting approximately 692,000 barrels of oil per day moving through its pipeline system — about 77 per cent of its maximum capacity.

The company's CEO also reported that the pipeline moved 790,000 barrels of oil per day in March, which is an even higher percentage.

Smith, Conservative Leader Pierre Poilievre and other oil patch boosters have long advocated for a new pipeline through central and eastern Canada to open up new markets for Alberta oil and end the country's reliance on foreign imports. Importers hauled in about 500,000 barrels of oil a day from the U.S., Nigeria and Saudi Arabia in 2023.

Poilievre said Tuesday the reappointment to cabinet of Guilbeault, whom he accused of furthering "a radical green agenda," is concerning.

Meanwhile, Carney's new natural resources minister Tim Hodgson, a past board member of MEG Energy, a Calgary-based oil sands producer, said he's headed out West "very soon" and is looking to work with industry to "build a more prosperous, secure and safe Canada."

Secretary of State Buckley Belanger of Saskatchewan said Carney is "quite serious about bringing this country together," and there will be Western voices around the cabinet table when the discussion turns to energy, pipelines and the like.

"We're going to keep explaining some of the issues as best we can — what plagues the province," Belanger said.

WATCH: New secretary Belanger says Carney 'on the right path' to unite the country:

As for Trump, Carney has identified dealing with the American trade problem as among the most pressing issues for his cabinet.

The Prime Minister's Office released a list of those who will sit on the cabinet's new "secure and sovereign Canada" committee, which will be charged with managing Canada-U.S. relations — a file that Carney has said he will personally take the lead on. That committee will be chaired by Defence Minister David McGuinty, who accompanied Carney to the White House last week.

One person who is not on that 10-member committee is Transport and Internal Trade Minister Chrystia Freeland, whom Trump called "a terrible person" last week, although not by name.

Freeland said ahead of today's cabinet meeting that she's laser-focused on knocking down domestic trade barriers by Canada Day, one of Carney's major campaign commitments.

She said the International Monetary Fund (IMF) posits Canada could boost GDP by some four per cent if it does away with these internal roadblocks.

"That is a lot. We need it right now," she said. "I really believe at this moment we can get it done. Internal trade has begun to be sexy — it's funny, but it's true."

Carney has appointed three different ministers who all share some responsibility for the trade file, at a time when government data suggests there has already been a sizable decline in exports to the U.S. amid the tariff standoff. The latest Statistics Canada figures peg the drop at about seven per cent.

International Trade Minister Maninder Sidhu told reporters Canada is "over-leveraged with the U.S. and we need to diversify trade." He said one of his priorities will be opening up "new markets," but he didn't specify which ones.