Quebec’s Efforts to Counter U.S. Trade War Effects and Boost Economy
In response to the ongoing impact of the trade conflict with the U.S., the Legault government in Quebec is rolling out a set of initiatives aimed at easing financial burdens for residents. Finance Minister Eric Girard recently presented an economic update that introduces tax relief for workers and outlines the utilization of the Green Fund surplus to address the province’s debt and assist businesses grappling with tariffs imposed by U.S. President Donald Trump.
The economic forecast for 2025-26 indicates a more robust economic growth trajectory for Quebec than previously anticipated in the budget. The projected deficit for this period stands at $12.4 billion, a reduction from the $13.6 billion forecasted last year. The government’s outlook is based on the assumption that the tariffs imposed by the Trump administration on Quebec will remain below 10 percent but may persist.
Notably, the plan includes measures to enable workers to save $1.8 billion over five years by lowering contribution rates to the Quebec Pension Plan (QPP) and Quebec Parental Insurance Plan (QPIP). Starting January 1, 2026, employees in Quebec could save up to $137, while self-employed individuals stand to benefit with savings of up to $259, as per the economic update.
Minister Girard disclosed that the $1.8 billion surplus from the Green Fund, earmarked for climate change initiatives, will now be directed towards paying down the province’s debt through the Generations Fund in 2026-27. The decision to reallocate the surplus has been supported by Bill 7, spearheaded by Treasury Board President France-Élaine Duranceau.
The government’s objective remains focused on balancing the budget by 2029-30 and reducing the debt-to-GDP ratio to 32.5 percent by 2037-38. Furthermore, initiatives such as canceling the capital gains inclusion rate increase and implementing a 2.05 percent indexation of personal income tax parameters and social assistance benefits are in the pipeline for implementation starting next year.
Additionally, special provisions have been outlined to aid citizens, including increased benefits for programs like the Residential Adaptation Assistance Program and RénoRégion to enhance housing conditions, along with a boost in the special benefit for infant formula purchases to support low-income families.
To mitigate the impact of tariffs on specific industries, the government is introducing measures to expedite the write-off of investments, provide tax savings for manufacturing businesses, and offer a payroll tax holiday for enterprises in the fishing, agriculture, and forestry sectors, which have been severely affected by the tariffs. The Health Services Fund contribution rate will be reduced to 0 percent for select industries to provide substantial savings and immediate cashflow boosts.