Record deficits and tariffs: Quebec to unveil first budget since trade war with U.S.

Tuesday's Quebec budget is expected to include an over $11 billion deficit as the province spends to counter tariffs in the U.S.-Canada trade war.

Quebec’s deficit for the 2025-2026 fiscal year will break a new record, surpassing $11 billion, due to economic uncertainty caused by Donald Trump’s tariffs, Finance Minister Eric Girard confirmed on Monday.

“This is because we need to focus on the economy. (...) And we also need to make greater provisions because we are in a period of great uncertainty,” explained the minister at a news conference on Monday, where he discussed the main points of his budget.

The budget will be officially tabled on Tuesday.

“It’s a complex budget in an extremely difficult environment. We have chosen to focus on the economy while protecting public services,” Girard said.

Despite the challenges, the minister said that the situation was “under control.”

Girard also said that the 2024-2025 deficit – originally projected at $11 billion -- will ultimately be lower. That figured had been a record in absolute terms.

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The minister will present a five-year plan to return to a balanced budget despite the economic uncertainty. Girard also promised that his budget would include reinvestments in public services.

“What is important is that revenues grow faster than expenditure and that we converge towards a balanced budget,” he explained.

Recession?

Economic turbulence is unlikely to subside anytime soon, especially with Trump threatening to impose additional tariffs on April 2.

Still, Girard believes Quebec can avoid a recession.

“The threat is significant, but there will be discussions and negotiations. And just because tariffs are introduced on April 2 doesn’t mean they will remain in place for a long time,” he said.

The finance minister also used the news conference to announce $15 million in funding over three years for business research and innovation.

“Innovation will be a central theme of the budget,” he said.

‘Like a child in a candy store’

“François Legault manages Quebecers’ money like a child in a candy store—without restraint and without the slightest discipline. Over all these years in power, he has squandered hard-earned tax dollars. Our economy has declined under the CAQ. Our small and medium sized businesses are suffering more than ever from the lack of a true ‘Quebec first’ vision,” said interim Liberal leader Marc Tanguay.

“I urge François Legault and his minister Eric Girard not to worsen workers’ economic situation by cutting public services. (…) I also urge them to ensure that if one person in a household loses their job due to Trump’s tariffs, their partner doesn’t lose theirs because of François Legault’s service cuts,” said Québec Solidaire parliamentary leader Ruba Ghazal.

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“I expected that we wouldn’t surpass the last historic deficit, because it’s risky for Quebec’s credit rating and financial health. Now we have to analyze it. But obviously, what we’ll be watching is where the cuts are being made to reach this deficit—especially considering the waste at SAAQclic and several decisions costing hundreds of millions for businesses,” said Parti Québécois leader Paul St-Pierre Plamondon.