Quebec Business Trends June 2025 – Economists Anticipate “Pervasive Uncertainty” To Prove Challenging
The ongoing tariff war between the U.S. and Canada, and the U.S. and with other countries, have affected sales of most hardwood species of grades and thicknesses. Ex-ports to the U.S. have dropped, while shipments to China have increased slightly for some in the export business of Cherry, Red and White Oak, Walnut, Poplar and Ash. Some businesses increased supplies of these species. As well, at the time of this writing, the upcoming federal election of April 28 also impacted businesses, as we were waiting to see who the next prime minister of Canada would be. Businesses continue to deal with supply chain issues, finding qualified workers and maintaining them.
The regionally important species Hard Maple continues to be a solid seller on domestic markets. With the risk of stain during April and May, production of whitewood logs is the focus at the time of this writing. Production is being absorbed on the markets. Demand for Soft Maple was also reported as positive, and Green No. 1 Common and Better Soft Maple was selling well.
Red Oak demand remains fairly busy on domestic and international markets, noted contacts. Sales were steady for White Oak for both domestic and overseas. Supplies are still elevated for this species commented some contacts.
Sawmills commented White Oak was moving well, with the drying operators purchasing No. 1 Common and Better. The flooring manufacturers were ordering larger quantities of this species as well. Some businesses noted a slight rise in their exports of this species.
Domestic demand for Poplar was keeping pace with production. Wholesalers were seeking more supplies of green Poplar. Export markets such as Vietnam, Mexico and China continue to purchase more of the common grades.
Although business was not strong for Walnut, noted contacts, market conditions remained steady with certain markets continuing to be price sensitive. Demand for green Walnut was solid, and in some cases exceeding supplies, added contacts.
According to a published report, economists warn that even though Canada may have dodged stiffer tariffs for the U.S., it is hardly off the hook. Weaker global demand from the duties U.S. President Donald Trump imposed on the rest of the world and the “pervasive uncertainty” of the trade war will hit Canada’s economy hard this year, said Oxford Economics in a recent report.
Oxford Economics stated that despite the lower U.S.-Canada tariffs, higher U.S. tariffs on the rest of the world will significantly weaken U.S. and global demand and deepen the recession in Canada.
Canada started the year on a high with the economy getting an artificial boost in January as companies pushed more exports to the U.S. ahead of tariffs and the federal government gave consumers a break on GST (Federal Goods and Services Tax).
The Gross Domestic Product rose 0.4 percent in January, above expectations, but Statistics Canada’s early estimate suggests it stalled in February. However, the trade war between Canada and the U.S. showed up in the labor market—and unemployment rose to 6.7 percent.
The Oxford economists said U.S. tariffs on other countries would weaken Canada’s exports, while the “trade war and pervasive uncertainty will paralyze private investment.” It now expects a 1.3 percent peak-to-trough drop in GDP between the second quarter of 2025 and the first quarter of 2026, deeper than they projected in March.
Not all economists predict a recession in Canada, but it did come up in the Bank of Canada’s monetary policy report in April. (See Ontario Trends in this publication for Bank of Canada’s monetary update.)
Oxford argues that uncertainty around U.S. trade policy remains “exceptionally high,” and even if tariffs are scaled back, it will continue to hamper economic activity.
We are seeing signs that the uncertain environment is curbing hiring, investment plans and housing activity and economists expect the impact to grow the longer it per-sists.
Oxford predicts Canadian home prices will fall 8 to 10 percent by mid-2026 and the loss of 200,000 jobs will drive the unemployment rate to 7.7 percent in the second half of this year.
Despite these somewhat grim predictions, Canada’s overall economic risk score is just slightly above the average for advanced economies, continued Oxford.
The report does however warn the effects of Trump’s trade war could linger for years to come, keeping business investment and productivity low.
Oxford forecasts GDP growth will average only 1.9 percent a year between 2030 and 2050. In a worse-case scenario, where the trade war escalates, creating more barriers amid rising protectionism, growth could slow to just 1.1 percent.
