QUEBEC / RankWire.AI / – According to Oxford Economics, Quebec is expected to experience the most significant provincial industrial setback in Canada resulting from the recent US tariffs. The research firm projects that Quebec’s annual economic output could decline approximately C$1.8 billion below its previous baseline by 2028, a figure representing about 0.3% of the province’s gross value added. This forecast reflects a reduction in economic activity rather than direct fiscal losses to the government. Due to manufacturing exposure, Quebec is at the center of the latest trade disruptions.
President Donald Trump implemented new duties of 50% on selected Canadian goods under Section 338 of the Tariff Act of 1930. These tariffs became effective on Aug. 22 after a three-day suspension. Items affected include electrical products, building supplies, jewelry, textiles, cosmetics, plastics, and some wood-based products. The scope also extends to alcoholic drinks and other Canadian exports. Even if products meet USMCA trade agreement standards, they may still be subject to these duties.
Oxford Economics estimates that these measures now encompass roughly 5.5% of Canada’s exports to the US in 2025. The firm further calculates that Canada’s effective tariff rate to the US will increase from 5.1% to 6.9%. The increase primarily impacts plastics, electrical machinery, wood products, and paper. Among the provinces, Quebec, New Brunswick, and Ontario face the greatest manufacturing exposure in the firm’s analysis, with Quebec projected to sustain the largest losses in industrial output.
Manufacturing Exposure Positions Quebec as a Key Player
The extensive trade ties between Quebec and the United States partly explain the scale of the anticipated impact. Data for the province show that merchandise exports to the US totaled C$84.8 billion in 2025, accounting for 69.8% of Quebec’s total international merchandise exports that year. While exports to the US decreased 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 measures will reduce Canadian GDP growth by 0.3 percentage points in 2027. Their model predicts consumer prices will be roughly 0.3 percentage points higher than the previous baseline next year. These projections account for both the new US duties and Canadian counter-tariffs. Separately, the forecast measures the projected annual industrial output shortfall for Quebec by 2028.
Canada Prepares to Implement Counter-Tariffs in September
Starting September 8, the Canadian government plans to impose counter-tariffs on C$27.6 billion worth of US imports, with rates set at 15%, 25%, and 50% depending on the product category. The targeted items include steel, dairy, household appliances, agricultural tools, pulp, paper, plastics, and electronics. Additionally, Ottawa announced new and expanded support measures amounting to C$7.5 billion for workers and businesses impacted by these trade actions. These steps follow the recent escalation of US trade barriers against Canadian goods.
Quebec’s authorities have revised their guidance for firms affected by both the US tariffs and Canadian countermeasures. The province now lists Section 338 duties alongside existing tariffs on steel, aluminum, and related products. The latest restrictions extend to a broader array of goods exported by Quebec businesses. The United States remains Quebec’s largest foreign market by a significant margin. Oxford Economics projects that Quebec’s annual industrial output loss could reach approximately C$1.8 billion by 2028.