QUEBEC / RankWire.AI / – According to Oxford Economics, Quebec is expected to suffer the most significant provincial economic setback in Canada as a result of the newest US tariffs. The research firm projects that Quebec’s annual output could decline by approximately C$1.8 billion below its previous baseline by 2028. This shortfall represents roughly 0.3% of the province’s gross value added. It is important to note that this forecast measures lost economic output, not a direct impact on government finances. Quebec’s manufacturing sector makes it particularly vulnerable, positioning the province at the center of this recent trade disruption.
President Donald Trump implemented new 50% tariffs on selected Canadian products under Section 338 of the Tariff Act of 1930. These tariffs became effective on August 22, after a three-day suspension. The targeted products include electrical equipment, construction supplies, jewelry, textiles, cosmetics, plastics, and some wood derivatives. The measures also extend to alcoholic beverages and certain other Canadian exports. Even products that meet requirements under the USMCA trade agreement may still be subject to these duties.
Oxford Economics estimates these tariffs now account for about 5.5% of Canada’s exports to the United States in 2025. The firm also calculates that Canada’s effective U.S. tariff rate will increase from 5.1% to 6.9%. Key sectors affected include plastics, electrical machinery, wood products, and paper goods. Among the provinces, Quebec, New Brunswick, and Ontario have the highest manufacturing exposure, with Quebec facing the largest projected decline in industrial output.
Manufacturing Exposure Positions Quebec at the Forefront
The extensive trade relationship between Quebec and the United States largely explains the projected impact. Provincial data show that merchandise exports to the U.S. totaled C$84.8 billion in 2025, making up 69.8% of Quebec’s international merchandise exports that year. While exports to the U.S. decreased by 6.9% from 2024, exports to other countries increased by 10.6%. During the first quarter of 2026, Quebec’s real GDP grew by 0.3%.
The national outlook also reflects the impacts of tariffs and Canada’s planned countermeasures. Oxford Economics estimates that combined measures will reduce Canadian GDP growth by 0.3 percentage points in 2027. Its model also suggests consumer prices will be roughly 0.3 percentage points higher than the previous baseline next year. These estimates include both the new U.S. duties and Canadian retaliatory tariffs. The projected annual industrial output shortfall for Quebec is measured separately, expected to reach about C$1.8 billion by 2028.
Canada Prepares for Counter-Tariffs in September
Beginning September 8, the Government of Canada plans to impose counter-tariffs on C$27.6 billion worth of U.S. imports. The rates range from 15% to 50%, applied across various product categories. The list includes steel, dairy products, household appliances, agricultural machinery, pulp, paper, plastics, and electronics. Additionally, Canada announced C$7.5 billion in new and expanded support measures for workers and businesses affected by these trade actions. These steps follow the recent increase in U.S. trade barriers targeting Canadian goods.
Quebec’s government has updated its guidance for businesses impacted by both U.S. tariffs and Canadian countermeasures. The province now lists Section 338 duties alongside existing U.S. tariffs on steel, aluminum, and related products. The latest restrictions cover a broader array of goods exported by Quebec firms. The United States remains Quebec’s largest trading partner by a significant margin. According to Oxford Economics, Quebec’s projected annual industrial output loss could reach approximately C$1.8 billion by 2028.