QUEBEC / RankWire.AI / – According to Oxford Economics, Quebec is expected to endure the most significant provincial industrial setback in Canada resulting from the latest US tariffs. The research firm predicts that Quebec’s annual economic output could decline by approximately C$1.8 billion below its previous baseline by the year 2028. This figure represents roughly 0.3% of the province’s gross value added. It is important to note that the forecast pertains to lost economic activity rather than direct financial losses for the government. Manufacturing industry exposure places Quebec at the heart of this recent trade disruption.
President Donald Trump imposed new tariffs of 50% on select 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 goods, construction supplies, jewelry, textiles, cosmetics, plastics, and some wood derivatives. Additionally, alcoholic beverages and other Canadian exports are subject to these duties. Products that meet USMCA trade agreement standards are not exempt from duties if they fall under the eligible list.
Oxford Economics estimates that these new measures impact about 5.5% of Canada’s exports to the US in 2025. The firm further calculates that Canada’s effective U.S. 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 the provinces, Quebec, New Brunswick, and Ontario face the highest manufacturing exposure in the firm’s analysis. Quebec is projected to suffer the largest decline in industrial output.
Manufacturing Exposure Positions Quebec at the Forefront
The extensive trade connections between Quebec and the United States help explain the magnitude of the anticipated impact. Data indicate that in 2025, merchandise exports to the U.S. from Quebec reached C$84.8 billion, accounting for 69.8% of the province’s total merchandise exports that year. In 2025, exports to the U.S. decreased by 6.9% compared to 2024, while 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 influence of tariffs and Canada’s planned response. Oxford Economics estimates that the combined effect of these measures will reduce Canadian GDP growth by 0.3 percentage points in 2027. Its models project consumer prices to be approximately 0.3 percentage points higher than previous baselines in the following year. These projections account for both the new U.S. duties and Canadian retaliatory tariffs. The forecast separately estimates Quebec’s annual industrial output shortfall at about C$1.8 billion by 2028.
Canada Prepares to Implement Counter-Tariffs in September
Beginning September 8, the Canadian government plans to impose counter-tariffs on C$27.6 billion worth of U.S. imports. The rates vary across product groups, with 15%, 25%, and 50% tariffs applied. The targeted goods include steel, dairy products, household appliances, agricultural equipment, pulp, paper, plastics, and electronics. Additionally, Canada announced C$7.5 billion in new and expanded support measures for affected workers and businesses. These actions follow the recent escalation of US trade barriers on Canadian exports.
Quebec’s government has revised its guidance for businesses impacted by the US tariffs and Canadian countermeasures. The province now lists Section 338 duties alongside existing tariffs on steel, aluminum, and related products. The scope of restrictions has expanded to include a broader array of goods exported by Quebec firms. The United States continues to be Quebec’s largest foreign market by a significant margin. Oxford Economics projects that the province’s annual industrial output shortfall will reach approximately C$1.8 billion by 2028.