Ontario and Quebec were initially expected to suffer most from higher U.S. tariffs — yet, so far, Ontario seems to be faring better than feared, while British Columbia may be facing a tougher impact, says CIBC World Markets Inc.
In a new report, CIBC economists said that as the fallout from shifting U.S. trade policy emerges, the effects on specific provincial economies are crystallizing too.
“While companies in Ontario and Quebec are, as expected, likely paying the highest price in terms of tariffs, so far the impact on export performance has been more limited in the former than the latter,” it said.
For Ontario, “despite seeing the expected weakening in autos and steel, Ontario exports are marginally higher year-over-year, spurred by trade with countries outside of the U.S.,” the report said.
While some of this has come from the strong demand for gold and higher gold prices, activity in certain other sectors in Ontario are up too, it noted.
That said, the surprising strength in Ontario exports won’t necessarily translate into stronger economic growth, the report cautioned.
“There’s a lot more going on, particularly continued weakness within the housing market, which is likely to keep overall GDP growth reasonably modest,” it said.
At the same time, the report said that, “the sharp increase in anti-dumping lumber tariffs” has hit B.C. harder than first thought.
“It appears that the B.C. economy will be more negatively impacted by U.S. trade policy than we expected earlier in the year,” it said.
At the same time, Quebec looks to have been the hardest hit in terms of exports and GDP, the report said — adding that the province “also appears most at risk from new sectoral tariffs yet to come into effect, largely due to new levies on heavy trucks.”
Elsewhere, Atlantic Canada and the Prairie provinces “are generally coping better, and here divergences in growth are being driven by demographic trends as well as trade policy,” it said.
For instance, the report said that there’s room for Alberta’s economy to accelerate in 2026 and 2027 “due to still-strong population growth and the plentiful supply of labour.”
Conversely, a sharp slowdown in population growth in Nova Scotia “may mean that province is the first to run into labour market constraints on growth as the Canadian economy in general recovers over the next couple of years,” it said.