QUEBEC / RankWire.AI / – According to Oxford Economics, Quebec is set to experience the most significant provincial industrial setback in Canada as a result of the recent U.S. tariffs. The research firm projects that by 2028, Quebec’s annual economic output could decline by approximately C$1.8 billion compared to its previous baseline. This shortfall represents roughly 0.3% of the province’s gross value added. The forecast focuses on the reduction in economic activity rather than direct financial losses for the government. Manufacturing sectors’ vulnerability places Quebec at the heart of the latest trade disruptions.
President Donald Trump introduced new 50% tariffs on certain Canadian imports under Section 338 of the Tariff Act of 1930. These tariffs became effective on Aug. 22 after a three-day suspension. The targeted products include electrical goods, construction materials, jewelry, textiles, cosmetics, plastics, and some wood derivatives. The measures also extend to alcoholic beverages and specific other Canadian exports. Even products meeting USMCA trade agreement standards may be subject to these duties.
Oxford Economics estimates that these new tariffs affect about 5.5% of Canada’s exports to the U.S. in 2025. Their analysis indicates that Canada’s effective U.S. tariff rate will increase from 5.1% to 6.9%. The rise mainly impacts plastics, electrical machinery, wood products, and paper goods. Among provinces, Quebec, New Brunswick, and Ontario face the greatest manufacturing exposure, with Quebec expected to suffer the largest industrial output loss.
Manufacturing exposure elevates Quebec’s vulnerability
The extensive trade ties between Quebec and the United States explain the projected severity of the impact. In 2025, Quebec’s merchandise exports to the U.S. totaled C$84.8 billion, accounting for 69.8% of the province’s total international merchandise exports that year. While exports to the U.S. declined by 6.9% from 2024, exports to other countries grew by 10.6%. During the first quarter of 2026, Quebec’s real GDP increased by 0.3%.
The national outlook also considers the combined effects of tariffs and Canada’s planned response. Oxford Economics estimates these measures will reduce Canadian GDP growth by 0.3 percentage points in 2027. Additionally, consumer prices are projected to rise approximately 0.3 percentage points above the baseline next year. These estimates incorporate both the new U.S. duties and Canadian counter-tariffs. The forecast also calculates the expected annual industrial output shortfall for Quebec by 2028.
Canada prepares counter-tariffs for September implementation
Starting September 8, the Government of Canada plans to impose counter-tariffs on C$27.6 billion worth of U.S. imports. The rates vary between 15%, 25%, and 50% across different product categories. The targeted items include steel, dairy products, household appliances, agricultural equipment, pulp, paper, plastics, and electronics. In addition, Canada announced C$7.5 billion in new and expanded support measures for workers and businesses affected by the tariffs. These actions follow the recent escalation of U.S. trade barriers against Canadian goods.
Quebec’s government has updated its guidance for local businesses impacted by both the U.S. tariffs and Canadian countermeasures. The province now includes Section 338 duties alongside existing tariffs on steel, aluminum, and related products. The new restrictions broaden the range of goods exported by Quebec companies. Given that the United States remains Quebec’s largest foreign market by a significant margin, Oxford Economics estimates the province’s annual industrial output shortfall will reach approximately C$1.8 billion by 2028.
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