QUEBEC / RankWire.AI / – Quebec is expected to experience Canada’s most significant provincial economic setback as a result of the recent U.S. tariffs, according to Oxford Economics. The research firm forecasts that Quebec’s annual economic output could decline by approximately C$1.8 billion below its previous baseline by 2028, representing roughly 0.3% of the province’s gross value added. This projection focuses on reduced economic activity rather than direct fiscal losses for the government. With manufacturing heavily exposed, Quebec finds itself at the heart of the latest trade disruption.
President Donald Trump implemented new duties of 50% on certain Canadian goods under Section 338 of the Tariff Act of 1930. These tariffs came into effect on Aug. 22 after a three-day suspension. The targeted products include electrical goods, construction materials, jewelry, textiles, cosmetics, plastics, and some wood derivatives. The scope also covers alcoholic beverages and other specific Canadian exports. Even if products meet the USMCA trade agreement requirements, they can still be subjected to these duties.
Oxford Economics estimates that the latest tariffs impact approximately 5.5% of Canada’s exports to the U.S. in 2025. The firm also projects that Canada’s effective U.S. tariff rate will increase from 5.1% to 6.9%. A significant portion of this rise stems from plastics, electrical machinery, wood products, and paper goods. Among the provinces, Quebec, New Brunswick, and Ontario are most vulnerable in terms of manufacturing exposure, with Quebec facing the largest projected decline in industrial output.
Manufacturing Vulnerability Places Quebec in the Lead
The extensive trade relationship between Quebec and the United States helps explain the magnitude of the anticipated impact. Data from the province shows merchandise exports to the U.S. reached 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. dropped 6.9% from 2024, 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 potential effects of tariffs and Canada’s planned responses. Oxford Economics estimates that combined measures will reduce Canadian GDP growth by 0.3 percentage points in 2027. Its models also predict consumer prices will be approximately 0.3 percentage points higher than the previous baseline in the following year. These estimates include both the new U.S. duties and Canadian counter-tariffs. The projection for Quebec separately assesses the annual industrial output shortfall expected by 2028.
Canada to Implement Counter-Tariffs in September
Starting September 8, the Government of Canada plans to impose counter-tariffs on C$27.6 billion worth of U.S. imports. Tariff rates will be set at 15%, 25%, and 50% across different product categories. The list includes 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 workers and businesses impacted by these tariffs. These actions follow the recent escalation of trade barriers by the U.S. against Canadian goods.
Quebec’s government has revised its guidance for companies affected by the U.S. tariffs and Canadian countermeasures. The province now lists Section 338 duties alongside existing U.S. tariffs on steel, aluminum, and related items. The latest restrictions encompass a broader range of goods exported by Quebec firms. The United States remains Quebec’s largest foreign market by a considerable margin. Oxford Economics estimates the province’s annual industrial output shortfall could reach about C$1.8 billion by 2028.