As the federal government seeks to shore up Canada’s economic foundation through new trade deals and major projects, it could and should do more to help small towns and rural communities weather challenges and capture opportunities.

Prime Minister Mark Carney’s Davos speech underscored the importance of Canada’s economic transformation in an era of great power rivalry and a fading rules-based order.  The systems which long underpinned our prosperity—trade alliances, supply chains and a co-operative international community —are being redrawn.

The broad strokes of the government’s response are on the right track, with a focus on trade diversification, defence industrial capacity and climate competitiveness.

But our communities—the places on the front lines of what Prime Minister Mark Carney describes as a rupture—appear to be left without a plan, even as some face a fight for their very existence.

There are many actions governments can take to help them, including proactive policies that support the whole community through disruption, help major employers adapt to change, help workers capture new employment opportunities and empower community-led economic development strategies and rural entrepreneurs.

Limited Federal Response

Despite 156 references to communities in the 2025 federal budget, nowhere does it truly connect measures to the major challenges they face. The 10-year, $51-billion build communities strong fund is significant. But its scope is limited to basic municipal infrastructure such as roads, wastewater and hospitals, rather than foundational measures to support resilience.

Smaller communities dependent on sectors susceptible to disruption aren’t just facing a downturn. They risk facility closures and layoffs that could have ripple effects, devastating workers, contractors, restaurants, local governments and non-profits. In the worst case, housing prices could fall to where people owe more for their homes than they are worth.

The Community Transformation Project of the Institute for Research on Public Policy has identified susceptible communities that could face disruption in the coming decades from the global energy transition or trade policy changes in the U.S.. These communities have high concentrations of employment in manufacturing, natural resources or agriculture, and tend to be smaller and more rural.

Yet, the response of governments to a closure or layoff is still largely to react after the fact and focus only on the workers and employers directly affected. Often, the actions taken are too little, too late.

A Better Way

What if governments focused instead on proactive approaches to building resilience in susceptible communities and supported the whole community through major economic transformations?

What if investments in major projects came with co-ordinated plans for local training and support for entrepreneurial suppliers instead of influxes of outside workers?

What if economic development spending aimed to empower community-led strategies and rural entrepreneurs instead of dictating priorities?

What if government industrial policies, in collaboration with community leaders, helped major employers adapt to structural economic change?

And when a community does experience a major closure, what if a rapid response team arrived to help businesses, workers, households, local governments and community organizations navigate these challenges?

This approach isn’t charity. It is building Canada’s resilience from the ground up. Now is the time for Canadians to pull together to shore up our weakest fronts so they can lead the charge into the future.

A community resilience strategy doesn’t need to replace nation-building efforts. Rather, it can be embedded into every initiative – major projects, trade diversification, defence capacity or climate competitiveness, for example.

Canada’s small cities, towns, rural areas and Indigenous communities are too often an afterthought in these strategies, despite the fact almost 40% of Canadians live in communities with fewer than 100,000 people.

There have been some promising measures, such as:

• the $100-million partnership between the Business Development Bank of Canada and Community Futures organizations to support rural entrepreneurs;
• the establishment of workforce alliances to better co-ordinate public and private investments in skills development;
•  the November federal budget commitment to provide $1 billion over four years for dual-use Arctic Infrastructure; and
• the Buy Canadian policy and the strategic response fund that will also help to a certain extent.

But there is still a long way to go before we can declare Canadian communities resilient.

As the Carney government implements its response to the rupture Canada faces, it should ensure every part of the country has the tools needed to help win the fight—not only for their existence but for the country’s shared future prosperity amid global realignment.

This post originally appeared on Policy Options under a Creative Commons licence.