QUEBEC / RankWire.AI / – According to Oxford Economics, Quebec is expected to endure Canada’s most substantial provincial industrial setback resulting from the recent US tariffs. The research firm projects that Quebec’s yearly output might decline by approximately C$1.8 billion relative to its prior baseline by 2028. This shortfall represents about 0.3% of the province’s gross value added. The forecast reflects a reduction in economic productivity rather than a direct financial loss to government revenues. With manufacturing being a key sector, Quebec finds itself at the heart of the latest trade tensions.
President Donald Trump announced new 50% tariffs on certain Canadian goods under Section 338 of the Tariff Act of 1930. These duties came into effect on Aug. 22 after a three-day suspension. The list of affected products includes electrical appliances, construction supplies, jewelry, textiles, cosmetics, plastics, and some wood-based items. The measures also extend to alcoholic beverages and other Canadian exports. Even if products meet USMCA trade agreement standards, they can still be subject to these tariffs.
Oxford Economics estimates that the latest tariffs account for 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 increases from 5.1% to 6.9%. The rise is largely driven by plastics, electrical machinery, wood products, and paper goods. Among the provinces, Quebec, New Brunswick, and Ontario are most exposed in manufacturing, with Quebec projected to experience the largest decline in industrial output.
Manufacturing Exposure Positions Quebec at the Forefront
The extensive trade relationship between Quebec and the United States largely explains the scale of the expected impact. Data show that Quebec’s merchandise exports to the US reached C$84.8 billion in 2025, constituting 69.8% of the province’s total international merchandise exports that year. In 2025, exports to the US decreased by 6.9% from 2024, while exports to other countries grew by 10.6%. During the first quarter of 2026, Quebec’s real GDP increased by 0.3%.
The national outlook also considers the impact of tariffs and Canada’s anticipated responses. Oxford Economics estimates that combined measures will slow Canadian GDP growth by 0.3 percentage points in 2027. Their model also suggests consumer prices could be about 0.3 percentage points higher than previously forecast next year. These projections incorporate both the new US duties and Canadian counter-measures. The forecast for Quebec separately indicates an annual industrial output shortfall of around C$1.8 billion by 2028.
Canada Prepares for Counter-Tariffs Set for September
The Government of Canada plans to implement counter-tariffs on C$27.6 billion worth of US imports starting Sept. 8. Ottawa has set tariffs of 15%, 25%, and 50% across various product categories. The list includes steel, dairy, household appliances, agricultural equipment, pulp, paper, plastics, and electronics. Additionally, Canada announced C$7.5 billion in new and expanded support for workers and businesses affected by these measures. These actions follow the recent escalation of US trade barriers targeting Canadian goods.
Quebec’s government has updated its guidance for local businesses impacted by both 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 range of goods exported by Quebec companies. The United States remains Quebec’s largest foreign market by a significant margin. Oxford Economics estimates the province’s projected annual industrial output loss at approximately C$1.8 billion by 2028.