A Desjardins economic report released today (Tues) states that Canadian provinces began 2025 on a strong note, but impending U.S. tariffs could cause significant slowdowns, affecting each province a bit differently.

Non-energy sectors, particularly manufacturing, are expected to be the most affected, which would hinder economic activity in Ontario, Quebec, Manitoba and PEI. Oil-exporting provinces like Alberta and Saskatchewan may fare better due to anticipated tariff exemptions, according to the report, and since oil and gas are their largest exports to the U.S., the two provinces rank among the lowest in terms of U.S. export exposure. British Columbia and Nova Scotia are less reliant on U.S. trade so are expected to outperform other provinces economically.

The report also suggests tariff turmoil will mean an eventful budget season for the provinces and territories and the federal government. Prior to any news from the U.S., Desjardins says real economic growth is on track for robust gains, driven by consumer spending in the second half of last year.