Desjardins Estimates Provinces are Well-Equipped with Approximately $100 Billion for Tariff Relief

According to a recent report, Canada’s provincial governments are well-equipped to handle potential U.S. tariffs without significantly increasing their debt levels.

The analysis by Desjardins Economics, released on Tuesday, anticipates that upcoming provincial budgets will mainly focus on preparing for potential tariffs promised by U.S. President Donald Trump in 2025, adding uncertainty to fiscal forecasts.

Laura Gu, a senior economist at Desjardins, stated in an interview, “The provinces are facing budget uncertainties similar to those during the pandemic.”

Nova Scotia recently started the provincial budget season and revealed plans for a $200-million reserve fund to address the threat of U.S. tariffs, acknowledging heightened risks and uncertainties.

Desjardins estimates that provincial governments, along with federal support, have approximately $100 billion in fiscal resources to aid industries and individuals affected by tariffs.

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Desjardins suggests that provincial governments could utilize these funds without causing the net debt-to-GDP ratio to exceed 35 percent, levels last seen during the COVID-19 pandemic.

Employment in the hardest-hit provinces could fall by one percent if tariffs are partially imposed, according to Desjardins’ baseline scenario.

Ontario, Quebec, and Manitoba are expected to be most impacted by potential tariffs, while British Columbia and Nova Scotia are predicted to fare better due to their lower reliance on U.S. trade.

Alberta’s next provincial budget release is scheduled for Thursday.