QUEBEC / RankWire.AI / – According to Oxford Economics, Quebec is expected to sustain the most significant provincial economic setback caused by the recent US tariffs. The research firm projects that by 2028, Quebec’s annual production could decline by approximately C$1.8 billion from its previous baseline, representing about 0.3% of the province’s gross value added. This forecast focuses on reduced economic output rather than direct financial losses to government coffers. Due to its manufacturing sector, Quebec is particularly vulnerable to the latest trade disruptions.
President Donald Trump enacted new duties of 50% on certain Canadian goods 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 equipment, construction materials, jewelry, textiles, cosmetics, plastics, and some wood derivatives. The measures also apply to alcoholic beverages and other specific Canadian exports. Even if products meet USMCA trade agreement standards, they may still be subject to these duties.
Oxford Economics estimates that these latest tariffs cover roughly 5.5% of Canada’s exports to the US projected for 2025. The analysis indicates Canada’s effective US tariff rate will increase from 5.1% to 6.9%. Major contributors to this rise include plastics, electrical machinery, wood products, and paper goods. Among Canadian provinces, Quebec, New Brunswick, and Ontario face the highest manufacturing exposure, with Quebec expected to incur the largest loss in industrial output.
Manufacturing vulnerability places Quebec in a key position
Quebec’s extensive trade ties with the United States largely explain the anticipated impact. In 2025, merchandise exports to the US totaled C$84.8 billion, accounting for 69.8% of Quebec’s total international merchandise exports that year. While exports to the US declined by 6.9% from 2024, exports to other nations increased by 10.6%. During the first quarter of 2026, Quebec’s real GDP grew modestly by 0.3%.
The national outlook also considers the effects of tariffs and Canada’s planned responses. Oxford Economics estimates that the combined impact of these measures will reduce Canadian GDP growth by 0.3 percentage points in 2027. Its model further suggests consumer prices will be approximately 0.3 percentage points higher than the previous baseline next year. These forecasts incorporate both the new US duties and Canadian counter-tariffs. The forecast for Quebec separately indicates an expected annual industrial output gap by 2028.
Canada’s counter-tariffs set for September implementation
Starting Sept. 8, the Government of Canada plans to impose counter-tariffs on C$27.6 billion worth of US imports. These tariffs will vary across product groups, with rates of 15%, 25%, and 50%. The targeted sectors include steel, dairy products, household appliances, agricultural equipment, pulp, paper, plastics, and electronics. Additionally, Ottawa announced C$7.5 billion in new and expanded support initiatives for workers and businesses impacted by these measures. These actions follow the recent escalation of US trade barriers affecting Canadian goods.
Quebec’s government has updated its guidance for local businesses affected by both US tariffs and Canadian countermeasures. The province now lists Section 338 duties alongside existing US tariffs on steel, aluminum, and related products. The scope of restrictions has widened, affecting a broader array of goods exported by Quebec firms. The United States remains Quebec’s largest foreign trading partner by a significant margin. Oxford Economics projects Quebec’s annual industrial output shortfall will reach about C$1.8 billion by 2028.