QUEBEC / RankWire.AI / – According to Oxford Economics, Quebec is expected to endure the largest economic setback among Canadian provinces due to the recent US tariffs. The research firm projects that Quebec’s yearly output could decline by approximately C$1.8 billion relative to its previous baseline by 2028. This deficit represents about 0.3% of the province’s gross value added. The forecast focuses on the reduction in economic activity rather than a direct impact on government finances. Manufacturing sector exposure makes Quebec particularly vulnerable to this latest trade disruption.
President Donald Trump enforced new 50% duties on selected Canadian imports under Section 338 of the Tariff Act of 1930. The tariffs became effective on August 22 after a three-day suspension period. The affected products include electrical goods, construction materials, jewelry, textiles, cosmetics, plastics, and some wood derivatives. The scope also extends to alcoholic beverages and various other Canadian exports. Even products compliant with the USMCA trade agreement may face these duties.
Oxford Economics estimates that these recent measures impact roughly 5.5% of Canada’s exports to the United States in 2025. They also calculate that Canada’s effective tariff rate to the US increases from 5.1% to 6.9%. A significant portion of this rise comes from plastics, electrical machinery, wood products, and paper goods. Among the provinces, Quebec, New Brunswick, and Ontario face the highest manufacturing exposure, with Quebec expected to experience the largest loss in industrial output.
Manufacturing Exposure Positions Quebec at the Forefront
Quebec’s strong trade ties with the United States help explain the magnitude of the projected impact. Data shows that in 2025, merchandise exports from Quebec to the US totaled C$84.8 billion. These shipments made up 69.8% of Quebec’s total international merchandise exports that year. Exports to the US declined by 6.9% from 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 considers the implications of tariffs and Canada’s planned countermeasures. Oxford Economics estimates that the combined effects of these measures will reduce Canadian GDP growth by 0.3 percentage points in 2027. Additionally, consumer prices are expected to be about 0.3 percentage points higher than previously projected next year. These estimates include both the new US duties and Canadian retaliatory tariffs. The forecast also separately estimates the annual industrial output shortfall for Quebec by 2028.
Canada Announces Counter-Tariffs for September Implementation
Starting September 8, the Canadian government plans to impose counter-tariffs on C$27.6 billion worth of US imports. The rates vary across product groups, with tariffs set at 15%, 25%, and 50%. The affected items include steel, dairy products, household appliances, agricultural machinery, pulp, paper, plastics, and electronics. Canada also unveiled C$7.5 billion in new and expanded support measures aimed at workers and businesses impacted by these tariffs. These actions follow the recent escalation of US trade barriers targeting Canadian exports.
Quebec’s government has revised its guidance for local businesses affected by these US tariffs and Canadian counter-measures. The province now lists Section 338 duties alongside existing US tariffs on steel, aluminum, and related products. The recent restrictions have expanded to a broader array of goods sold by Quebec exporters. The United States continues to be Quebec’s most significant foreign market by a considerable margin. Oxford Economics projects that Quebec’s annual industrial output shortfall could reach approximately C$1.8 billion by 2028.