Did U.S. President Donald Trump\u2019s economic threats do more harm than good? Overall, Quebec\u2019s economy seems to have avoided the worst, but some sectors have been hit harder than others.<\/p>\n
Desjardins Group economist Sonny Scarfone paints a picture of someone who closed their eyes before the Republican president was elected and woke up at the end of the year.<\/p>\n
\u201cWhen you look at several indicators, it doesn\u2019t seem like this has been the fastest increase in customs tariffs by our main economic partner in over 80 years,\u201d he notes in an interview.<\/p>\n
Approximately 86 per cent of Canadian exports are exempt from customs duties because they comply with the free trade agreement between Canada, the United States, and Mexico (USMCA).<\/p>\n
The economist estimates that the effective customs duty on the Quebec economy is around 6.3 per cent. At the beginning of the year, there were fears that a 25 per cent tax would be imposed on all Canadian products.<\/p>\n
Quebec is thus in an advantageous position compared to other trading partners that have signed agreements with the United States. This is the case for the European Union and Japan, which have accepted a 15 per cent tax.<\/p>\n
Quebec is more penalized than the Canadian average, whose effective rate is estimated at 3.8 per cent.<\/p>\n
The importance of Quebec\u2019s aluminum sector partly explains this gap, while Alberta\u2019s oil and gas are exempt. \u201cWhen you add a 50 per cent tariff on one-ninth of your exports to your main recipient, it weighs on the average,\u201d explains Scarfone.<\/p>\n
Quebec is doing slightly better than Ontario, a more comparable economy. The automotive industry weighs heavily on exports from the most populous province, Scarfone points out.<\/p>\n
Paralyzing uncertainty<\/p>\n
While the worst seems to have been avoided, the trade conflict has not been without pain for Quebec businesses, says V\u00e9ronique Proulx, president and CEO of the Federation of Quebec Chambers of Commerce (FCCQ).<\/p>\n
\u201cIt is mainly the uncertainty that is hurting our businesses and our economy,\u201d she emphasizes. \u201cWe can see this in the fact that investment has been put on hold.\u201d<\/p>\n
\u201cWhat has hurt the economy the most is the fact that everyone is waiting and putting their investment projects on hold, whether it\u2019s expansions here in Quebec, investments in technology, or investments to diversify their export markets,\u201d she adds.<\/p>\n
In her discussions with leaders across Quebec, Proulx sees signs of a recovery. \u201cOne thing stands out: we are slowly feeling that things are picking up again. It\u2019s as if we are starting to get used to the uncertainty and are beginning to plan again.\u201d<\/p>\n
According to her, the trade war is not necessarily the main concern for entrepreneurs. Labor shortages and immigration restrictions are causing them a lot of concern. \u201cIt\u2019s the first thing people talk to us about when we travel to the regions.\u201d<\/p>\n
Aluminum: a blow to SMEs<\/p>\n
Large aluminum smelters with plants in Quebec, such as Alcoa and Rio Tinto, have been relatively unscathed by the crisis, despite the 50 per cent sectoral tariffs on their products.<\/p>\n
The United States does not produce enough aluminum to meet demand. In addition, sectoral tariffs have been imposed on all countries, putting Quebec on an equal footing with other exporters.<\/p>\n
The United States simply could not ignore Canadian aluminum, Alcoa CEO William Oplinger said during a discussion with financial analysts in April.<\/p>\n
\u201cIt would take at least five to six smelters to meet demand,\u201d he said. \u201cThese new smelters would require additional energy production equivalent to seven nuclear reactors or 10 times the Hoover Dam. Until production capacity is built in the United States, the most efficient way to source aluminum is through Canada.\u201d<\/p>\n
The situation is more difficult for Quebec processors, who do not necessarily have the upper hand, unlike aluminum smelters.<\/p>\n
These SMEs have attracted less attention, but they still represent 1,700 companies. \u201cThere are 40,000 jobs in the aluminum industry in Quebec, 30,000 of which are in SMEs involved in processing,\u201d points out Charlotte Laram\u00e9e, President and CEO of AluQu\u00e9bec. \u201cSo it\u2019s still a major issue.\u201d<\/p>\n
Processors are having to cope with an increase in the price of their inputs. Customs duties also bring the risk of losing contracts in the United States. \u201cIt\u2019s really a constant financial pressure,\u201d laments Laram\u00e9e.<\/p>\n
Filling out the paperwork required by U.S. customs is a costly and time-consuming administrative hassle. \u201cSMEs now have to invest in people dedicated to managing all the documentation requirements, tracking codes, and ensuring compliance with customs rules,\u201d she says. \u201cIt also means more legal fees.\u201d<\/p>\n
She cites a member who told her that his annual budget for customs paperwork had gone \u201cfrom $0 to $200,000.\u201d \u201cAll this for something that adds no value,\u201d Laram\u00e9e says.<\/p>\n
Forestry industry: a recovery in the spring?<\/p>\n
Accustomed to trade disputes with the United States, the forestry industry is being hit with cumulative tariffs of 45 per cent.<\/p>\n
The crisis has dealt a severe blow. Announcements of temporary closures have multiplied.<\/p>\n
However, Michel Vincent, chief economist at the Quebec Forest Industry Council (QFIC), is somewhat optimistic about 2026. Government aid has helped the industry \u201cmake it through to spring.\u201d<\/p>\n
Europeans have taken advantage of the dispute to sell their wood to Americans, but this offensive cannot continue as domestic demand is expected to increase on the Old Continent, the economist believes.<\/p>\n
At the same time, American demand should also pick up again. \u201cWe are seeing an increase in demand that will come from lower interest rates,\u201d says the expert. \u201cIt\u2019s just a matter of time.\u201d<\/p>\n
American companies will have no choice but to source their supplies from the Canadian market, he says. \u201cSelf-sufficiency in lumber in the United States is unattainable and will never happen.\u201d<\/p>\n
\u201cCanadian lumber will be welcome,\u201d he predicts. \u201cThey\u2019re going to buy it, and we\u2019ll be able to pass the bill on to them.\u201d<\/p>\n
\u2013This report by La Presse Canadienne was translated by CityNews<\/p>\n","protected":false},"excerpt":{"rendered":"Did U.S. President Donald Trump\u2019s economic threats do more harm than good? Overall, Quebec\u2019s economy seems to have…\n","protected":false},"author":2,"featured_media":203828,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[22],"tags":[273,111,139,69,147],"class_list":{"0":"post-203827","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-environment","8":"tag-environment","9":"tag-new-zealand","10":"tag-newzealand","11":"tag-nz","12":"tag-science"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/203827","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=203827"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/203827\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/203828"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=203827"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=203827"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=203827"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}