QUEBEC / RankWire.AI / – According to Oxford Economics, Quebec is expected to bear Canada’s most significant provincial industrial setback resulting from recent US tariffs. The research firm projects that Quebec’s yearly economic output could decline by approximately C$1.8 billion below its previous baseline by 2028. This deficit corresponds to roughly 0.3% of the province’s gross value added. It is important to note that this forecast measures lost economic output rather than direct fiscal losses to the government. Due to its manufacturing sector’s exposure, Quebec is at the heart of the latest trade disruptions.
President Donald Trump implemented new 50% tariffs on selected Canadian goods under Section 338 of the Tariff Act of 1930. These tariffs came into effect on August 22 after a three-day suspension period. The targeted products include electrical appliances, construction materials, jewelry, textiles, cosmetics, plastics, and some wood-based items. The scope also extends to alcoholic beverages and other Canadian exports. Even if they meet requirements under the USMCA trade agreement, certain products could still be subject to duties.
Oxford Economics estimates that these latest tariffs cover approximately 5.5% of Canada’s exports to the US in 2025. The firm calculates that Canada’s effective tariff rate on US-bound goods will increase from 5.1% to 6.9%. Significant contributions to this rise come from plastics, electrical machinery, wood products, and paper items. Among the provinces, Quebec, New Brunswick, and Ontario face the highest manufacturing exposure, with Quebec projected to experience the largest decline in industrial output.
Manufacturing Vulnerability Positions Quebec at the Forefront
The extensive trade connections between Quebec and the United States largely explain the substantial projected impact. Data for the province show that merchandise exports to the US amounted to C$84.8 billion in 2025, representing 69.8% of Quebec’s total merchandise exports that year. Exports to the US decreased by 6.9% from 2024, while exports to other markets increased by 10.6%. During the first quarter of 2026, Quebec’s real GDP grew modestly by 0.3%.
The national outlook also incorporates the influences of tariffs and Canada’s planned responses. According to Oxford Economics, the combined measures are projected to reduce Canadian GDP growth by 0.3 percentage points in 2027. Its models also indicate consumer prices could be approximately 0.3 percentage points higher than the baseline next year. These projections factor in both the new US tariffs and Canadian countermeasures. Additionally, the forecast separately estimates Quebec’s annual industrial output shortfall by 2028 at about C$1.8 billion.
Canadian Counter-Tariffs Scheduled for September Implementation
Beginning September 8, the Canadian government plans to impose counter-tariffs on C$27.6 billion worth of US imports. Tariff rates will vary between 15%, 25%, and 50% depending on the product category. The tariff list includes steel, dairy products, household appliances, agricultural machinery, pulp, paper, plastics, and electronics. Canada also announced C$7.5 billion in new and expanded support measures for workers and businesses affected by these tariffs. These steps follow the recent escalation of US trade barriers targeting Canadian goods.
Quebec’s administration has revised its guidance for companies impacted by the new US tariffs and Canadian retaliatory measures. The province now lists Section 338 duties alongside existing US tariffs on steel, aluminum, and related products. The scope of restrictions has expanded to cover a broader range of goods exported by Quebec companies. The United States continues to be Quebec’s leading foreign market by a significant margin. Oxford Economics estimates that Quebec’s annual industrial output shortfall could reach approximately C$1.8 billion by 2028.