QUEBEC / RankWire.AI / – According to Oxford Economics, Quebec is set to endure Canada’s most significant provincial industrial setback resulting from the recent U.S. tariffs. The firm estimates that by 2028, Quebec’s annual economic output could decline around C$1.8 billion from its previous baseline, roughly representing 0.3% of the province’s gross value added. This forecast reflects a loss of economic productivity rather than a direct financial drain on government coffers, with manufacturing being the sector most exposed to the ongoing trade disruptions.
President Donald Trump introduced new 50% duties on certain Canadian goods under Section 338 of the Tariff Act of 1930, with the tariffs coming into force on Aug. 22 after a three-day suspension. These measures target products such as electrical equipment, construction materials, jewelry, textiles, cosmetics, plastics, some wood derivatives, alcoholic beverages, and various other Canadian exports. Even when Canadian products meet USMCA trade standards, they remain susceptible to these duties.
Oxford Economics estimates that approximately 5.5% of Canada’s exports to the U.S. in 2025 will be impacted by these tariffs. The firm also calculates that Canada’s effective U.S. tariff rate will increase from 5.1% to 6.9%, with plastics, electrical machinery, wood products, and paper items contributing significantly to this rise. Among the provinces, Quebec, New Brunswick, and Ontario are most vulnerable, with Quebec projected to experience the largest decline in industrial output.
Manufacturing Exposure Elevates Quebec’s Risk
The extensive trade relationship between Quebec and the U.S. largely explains the severity of the anticipated impact, as provincial data show merchandise exports to the U.S. amounted to C$84.8 billion in 2025, making up 69.8% of Quebec’s total international merchandise exports that year. While exports to the U.S. decreased by 6.9% from 2024, shipments to other nations grew by 10.6%, and Quebec’s real GDP increased by 0.3% during the first quarter of 2026.
The national outlook also considers the combined effects of tariffs and Canada’s planned responses. Oxford Economics estimates these measures will reduce Canadian GDP growth by 0.3 percentage points in 2027, with consumer prices projected to be about 0.3 percentage points higher than the previous baseline next year. These estimates incorporate both the new U.S. duties and Canadian counter-tariffs, while Quebec’s specific projection quantifies the annual industrial output shortfall expected by 2028.
Canada Prepares Counter-Tariffs for September
Starting September 8, the Government of Canada plans to implement counter-tariffs on C$27.6 billion worth of U.S. imports, with rates varying between 15%, 25%, and 50% across different categories. The targeted products include steel, dairy, household appliances, agricultural equipment, pulp, paper, plastics, and electronics. Additionally, Canada announced C$7.5 billion in new and expanded support measures for workers and businesses affected by the tariffs. These actions follow the recent escalation of U.S. trade barriers on Canadian goods.
Quebec’s government has revised its guidance for businesses impacted by the new U.S. tariffs and Canadian countermeasures, now listing Section 338 duties alongside existing U.S. tariffs on steel, aluminum, and related products. The scope of restrictions has widened, affecting a broader range of goods exported by Quebec firms. As Quebec’s largest foreign market by far, the U.S. remains critical for the province. Oxford Economics projects the province’s annual industrial output loss to reach approximately C$1.8 billion by 2028.