QUEBEC / RankWire.AI / – According to recent models from Oxford Economics, Quebec is set to experience the most significant provincial economic decline due to a fresh set of U.S. tariffs. The firm forecasts these measures will decrease Quebec’s annual industrial output by nearly C$2 billion by 2028, with an estimated loss of about C$1.8 billion compared to a scenario without the new duties. Consequently, Quebec’s gross value added would be approximately 0.3% below that baseline.
President Donald Trump introduced 50% tariffs under Section 338 of the Tariff Act of 1930 on specific Canadian products. These duties took effect on Aug. 22 following a three-day suspension, impacting various items such as electrical and construction goods, jewelry, textiles, cosmetics, wood derivatives, plastics, and alcoholic beverages. The U.S. measures apply even when the products comply with the USMCA trade agreement, although some products already under national-security tariffs remain outside Section 338 coverage.
Oxford Economics indicates that these new U.S. tariffs encompass roughly 5.5% of Canada’s 2025 exports destined for the United States. The analysis suggests the effective U.S. tariff rate on Canadian exports will increase from 5.1% to 6.9%, with plastics, electrical machinery, and wood and paper products contributing most to this rise. The firm highlights that manufacturers in Quebec, New Brunswick, and Ontario face the highest exposure among provinces due to their product mix.
Tariffs increase Quebec’s manufacturing vulnerability
The impact on Quebec also stems from its dependence on U.S. demand, with official statistics showing merchandise exports to the U.S. reaching C$84.8 billion in 2025. This accounted for 69.8% of Quebec’s total international merchandise exports. While exports to the U.S. declined by 6.9% from 2024, exports to other nations increased by 10.6%. In the first quarter of 2026, Quebec’s real GDP grew by 0.3% following a 0.1% dip in the prior quarter.
At the national level, Oxford Economics projects that the combination of new U.S. tariffs and Canada’s planned retaliation will reduce Canadian GDP by 0.3 percentage points in 2027, relative to its August baseline. The same analysis forecasts consumer prices will be approximately 0.3 percentage points higher next year. These projections account for the combined effects of the Section 338 duties and Canada’s countermeasures, but do not characterize the C$1.8 billion loss for Quebec as a government budget deficit.
Canada prepares to implement matching counter-tariffs
Starting Sept. 8, the Government of Canada plans to impose counter-tariffs on C$27.6 billion worth of U.S. imports, applying rates of 15%, 25%, and 50% to align with the U.S. tariffs on targeted products. The measures will affect sectors including steel, dairy, appliances, agricultural equipment, pulp and paper, plastics, and electronics. Additionally, Canada announced C$7.5 billion in new and enhanced support for workers and businesses impacted by U.S. tariffs.
Updated guidance from Quebec’s government addresses companies regarding U.S. duties and Canadian countermeasures. The province lists the Section 338 tariffs alongside existing U.S. tariffs on steel, aluminum, and related goods. These new measures increase costs across a broad range of Quebec exports, while the United States remains the dominant foreign market for the province. The C$1.8 billion estimate from Oxford Economics quantifies the annual industrial output shortfall by 2028 compared to a baseline without the tariffs.