How the new U.S.

Canada and America have plunged deeper into a trade spat, escalating with both words and fresh rounds of tariffs.

Quebec is among the hardest-hit provinces, such is the extent of the trading relationship with the province’s southern neighbour, raising fears of lost jobs and higher costs.

Here’s what the escalating dispute affects the province.

What are Canada and the U.S. tariffing?

The U.S. imposed 50-per-cent tariffs on roughly $28 billion of Canadian goods on Aug. 22, including selected wood products, machinery, furniture, clothing, food, alcohol and consumer goods.

Canada will respond Sept. 8 with tariffs of between 15 and 50 per cent on U.S. imports, equal to about seven per cent of everything Canada imports, officials have said.

Ottawa calls its measures a “dollar-for-dollar” response because they target a similar value of trade, though that does not necessarily mean the two countries will collect the same amount in duties.

Steel, aluminum, copper wire, furniture, clothing, cosmetics and some electronics will face Canadian tariffs of as much as 50 per cent. Appliances, dairy products, machinery and household goods are among those facing lower rates. Initially, fisheries were included before being withdrawn.

Which Quebec industries will be hardest hit?

A Gazette analysis of recent trade data identified more than $8 billion of exposure in Quebec exports within the categories affected by the latest U.S. tariffs, though the actual amount subject to duties is likely to be lower because the trade data include some untargeted goods.

Wood and forest products account for more than $3 billion, although that includes $1 billion in softwood lumber facing separate duties. Machinery and packaging represent another multi-billion-dollar-plus industry, including refrigeration equipment, cranes, industrial machinery, cartons and plastic packaging.

Furniture and lighting categories account for about $1.5 billion. Jewellery, sporting goods and toys represent $834 million; clothing, footwear and textiles about $800 million; and food, beverages and alcohol about $615 million.

Canadian automobiles and parts already face 25 per cent tariffs. U.S. President Donald Trump has threatened to raise that rate to 50 per cent on Jan. 1, 2027.Canada’s retaliation could also increase costs for Quebec companies.

Much like the rest of Canada, Quebec’s economy is intertwined with its southern neighbour’s. Quebec exported more than $40 billion in goods there so far this year, and imported more than $20 billion.

Now, National Bank estimates Quebec’s average effective U.S. tariff rate will rise from 6.8 per cent to 11 per cent, the highest among the provinces.

It also comes as Premier Christine Fréchette launches an election campaign in which the economy is likely to be a central issue. Quebecers vote Oct. 5.

In May, Quebec’s economy also contracted slightly once again — in contrast with minor growth seen in the rest of Canada. In fact, since January 2025, the provincial economy has shrunk by 0.6 per cent. Canada’s has grown by 1.4 per cent.

Also of note is manufacturing output, which fell 1.2 per cent in May, while construction declined 0.4 per cent. Economists at National Bank warned weakness in manufacturing and wholesale trade could persist as the dispute unfolds.

How are Canada and Quebec supporting industries?

Ottawa announced $7.5 billion in new and expanded assistance across the country, including $1.5 billion for smaller businesses, $500 million in tariff-related loans through the Business Development Bank of Canada and a $2-billion diversification fund.

Another $3.5 billion will support workers and employers through extended employment-insurance measures and programs designed to help companies retain and retrain staff.

Quebec itself will also offer favourable loans to exporters and their suppliers. Businesses with annual revenue of between $1 million and $2 million can apply through regional county municipalities, while larger companies can seek assistance from Investissement Québec.

There may been a fervent wave of Canadian patriotism amid the trade war with the Trump administration, but Quebec business groups have still urged Ottawa to reach an agreement, even if doing so required concessions.

A Quebec Federation of Chambers of Commerce survey found 68.3 per cent of respondents favoured a deal on those terms. More than half said their businesses were already subject to at least one U.S. tariff.

The Gazette has reached out to several big companies in industries like wood and furniture that are directly affected by the new tariffs, and for the time, they are not commenting on the situation.

However, according to the chamber of commerce, affected companies reported average losses of $2.07 million, which they expect to reach $6.09 million within six months. The average number of jobs eliminated at those companies is projected to rise from 10 to 38 over the same period.

The Quebec Employers Council called the suspension of negotiations a major setback for businesses seeking stability with their largest trading partner.

“This suspension further weakens our economy, with effects that are being felt beyond the sectors directly affected,” council CEO Michelle Lambías Meunier said.

The Confédération des syndicats nationaux said it would examine the federal and provincial assistance packages and “make every effort to defend and protect workers affected by these new tariffs.”

Are you affected by the trade war? Write to me hnorth@postmedia.com