QUEBEC / RankWire.AI / – The latest U.S. tariffs are projected to cause Quebec to experience the most substantial provincial industrial decline in Canada, according to Oxford Economics. The research firm forecasts that Quebec’s yearly output could decrease by approximately C$1.8 billion below its previous baseline by 2028. This shortfall represents about 0.3% of the province’s gross value added. The estimate reflects a reduction in economic productivity rather than direct government revenue losses. Manufacturing sector exposure positions Quebec at the heart of the recent trade disruptions.
President Donald Trump implemented new duties of 50% on certain Canadian goods under Section 338 of the Tariff Act of 1930. These tariffs became effective on Aug. 22 after a three-day suspension period. The targeted products include electrical items, building materials, jewelry, textiles, cosmetics, plastics, and some wood derivatives. Alcoholic beverages and other Canadian exports are also subject to these measures. Even if products meet the USMCA trade agreement standards, they may still face duties.
Oxford Economics estimates that these new measures encompass roughly 5.5% of Canada’s exports to the U.S. in 2025. The firm calculates that Canada’s effective tariff rate to the U.S. will increase from 5.1% to 6.9%. The most significant increases are seen in plastics, electrical machinery, wood products, and paper goods. Quebec, New Brunswick, and Ontario are the provinces most exposed to manufacturing impacts, with Quebec projected to endure the greatest industrial output loss.
Manufacturing vulnerability places Quebec in a leading position
Quebec’s extensive trade connections with the United States largely explain the scale of the anticipated economic impact. Data for the province show merchandise exports to the U.S. amounted to C$84.8 billion in 2025. These exports made up 69.8% of Quebec’s total international merchandise exports that year. While exports to the U.S. declined by 6.9% from 2024, exports to other nations increased by 10.6%. During the first quarter of 2026, Quebec’s real GDP grew by 0.3%.
The national outlook also considers the 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 project consumer prices will be about 0.3 percentage points higher than previous estimates next year. These projections include both the new U.S. duties and Canadian counter-tariffs. Separately, the forecast indicates Quebec’s annual industrial output deficit could reach about C$1.8 billion by 2028.
Canada prepares counter-tariffs for September implementation
Starting September 8, the Canadian government plans to impose counter-tariffs on C$27.6 billion worth of U.S. imports, with rates set at 15%, 25%, and 50% depending on the product category. The targeted items 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 these trade actions. These steps follow the recent escalation of U.S. trade barriers against Canadian goods.
Quebec’s authorities have revised their guidance for businesses impacted by the new U.S. tariffs and Canada’s retaliatory measures. The province now lists Section 338 duties alongside existing tariffs on steel, aluminum, and related products. The latest restrictions extend to a wider range of goods exported by Quebec firms. The United States remains Quebec’s leading foreign market by a significant margin. Oxford Economics projects that Quebec’s annual industrial output shortfall could reach roughly C$1.8 billion by 2028.