08:39 AM EST, 02/12/2025 (MT Newswires) -- A new external shock is on the horizon -- the threat of 25% tariffs on nearly all Canadian exports to the United States -- making the risk of a recession very real in the province of Quebec, said Desjardins Economic Studies (DES).

To face this shock, DES needs to draw on what it has learned in past recessions and identify the best ways to support Quebec businesses.

Any provincial government intervention will need to take into account that different industries will be affected to varying degrees, DES wrote in a note. Support will need to be targeted.

While a number of industries in Quebec may be weakened by U.S. tariffs, especially manufacturing, others should prove to be more resilient, including tourism and retail. According to its analysis, 25% of Quebec's gross domestic product is concentrated in vulnerable sectors, while the remaining 75% is in more resilient industries.

Nearly 4% of Quebec's workers are in these vulnerable sectors and are directly exposed to exports to the U.S. Even industries with less international trade could ultimately suffer if tariffs cause a widespread economic slowdown.

Given the nature of this shock, which would primarily affect exporters and could last several years, DES has identified some programs that were launched or in place during the most recent economic crises and could be useful under the current circumstances. These include targeted aid, measures to support market diversification and tax incentives for reshoring, as well as training and reskilling programs for affected workers.

At the same time, recent experience shows that some types of aid should be approached with caution. These include overly general or prolonged universal aid and government equity investments, unless absolutely necessary.

Whatever programs are chosen, federal and provincial efforts will need to be closely aligned to maximize the efficiency of public spending.

The current situation could be viewed as an opportunity to accelerate Quebec's economic transformation through diversifying its export markets, modernizing its infrastructure and stepping up its efforts to improve business competitiveness, stated DES.

The Quebec Infrastructure Plan can be used as a catalyst to boost competitiveness if the U.S. tariffs are imposed. However, coordination issues with the federal government must be resolved so it can be implemented in a timely fashion, it added.

While interprovincial trade is an accessible opportunity for diversification, the gains that would come with reduced interprovincial trade barriers must be weighed carefully. Political obstacles suggest that these barriers could only be lifted partially.

At the same time, given their size, the European and Asian markets hold significant untapped potential for exporters -- but some support will be needed to help businesses gain a better understanding of these markets, according to DES.