Statistical analysis of the impact of U.S. tariffs on Quebec economy

By announcing on February 1 that U.S. imports of Canadian goods would be subject to tariffs of up to 25%, President Trump put an end to the speculation. However, two days later, on February 3, he put those same tariffs on hold for a month. Nonetheless, the potential impact of the tariffs remains uncertain.  

The Canadian Chamber of Commerce and the Bank of Canada agree that the country’s gross domestic product (GDP) could fall by around 2.5% if the U.S. were to go ahead with 25% tariffs. The Ministère des Finances du Québec is forecasting a 2.5% to 3% drop in the province’s GDP. For its part, the National Bank says it anticipates a decline in GDP of up to 6% in the event of an open trade war with a Canadian response to U.S. tariffs.

So, What’s Going to Happen?

In an attempt to clarify the situation and dampen speculation, Aviseo Consulting, in partnership with BCF, is conducting a two-part study. The first part will use statistics to provide an overview of Québec’s exports to the U.S. and identify the sectors most at risk. The second part will draw on a survey of a large number of business leaders to detail the nature and depth of the anticipated impacts as well as the actions planned to address them.

1. A Statistical Portrait 

The first part of the study will contain a detailed portrait of Québec exports with a breakdown by sector of activity, as well as an evaluation of the relative weight of these exports to the United States compared with exports to the rest of the world.  

However, this initial result alone won’t be enough to assess the impact. That’s why the statistical analysis will also focus on U.S. consumer spending on Québec goods to identify how important acquiring products imported from Québec is to American consumers. It’s also essential to assess the degree of U.S. dependence on imports from Québec and to verify current production and manufacturing capacities for their substitutes on American soil. If U.S. production does exist, how do the costs compare with production costs in Québec, and to what extent does it reduce America’s dependence on Québec goods? 

Carrying out these analyses is vital to determining the most vulnerable sectors of the Québec economy and the number of jobs that could be affected, either directly or indirectly. The study will propose solutions for the sectors most at risk, such as identifying potential new markets and options for reducing production costs, where appropriate. 

Finally, the statistical study will examine the impact of a Canadian response to possible U.S. tariffs. While the analysis of these retaliatory measures is bound to show positive impacts, such as increased government revenues, it’ll also reveal negative effects, since the products that Québec imports from the United States include goods that are essential inputs for the province’s manufacturing sector.

2. A Consultation to Highlight the Statistics 

The proposed statistical analyses will be aligned with the results of an extensive consultation of Québec companies. This survey will go beyond the numbers by documenting the real impacts anticipated by executives, the planned changes to their operations, and their feelings about the reprisals being considered. The cross-referencing of these data will shed new light on the situation and allow us to explore possible ways forward.  

Aviseo and BCF invite you to take part in this important study by taking 5 minutes to fill out the survey: link here  

The main findings of this study will be publised on February 25.