QUEBEC / RankWire.AI / – According to recent projections from Oxford Economics, Quebec is anticipated to experience the most significant economic setback among Canadian provinces due to a fresh wave of U.S. tariffs. The analysis indicates that by 2028, these measures could cut Quebec’s annual industrial output by nearly C$2 billion, with an estimated reduction of about C$1.8 billion compared to a scenario without the new duties. Consequently, Quebec’s gross value added is expected to fall approximately 0.3% below that baseline.
President Donald Trump enacted a 50% tariff under Section 338 of the Tariff Act of 1930 on certain Canadian products. These tariffs took effect on Aug. 22 after a brief three-day suspension. They target specific electrical and construction goods, jewelry, textiles, cosmetics, wood derivatives, plastics, and alcoholic beverages. The U.S. tariffs apply even when products meet the standards of the USMCA trade agreement. Items already subjected to other national-security tariffs are excluded from Section 338 coverage.
Oxford Economics estimates that the new U.S. tariffs impact roughly 5.5% of Canada’s exports to the U.S. in 2025. The measures are projected to increase the effective U.S. tariff rate on Canadian exports from 5.1% to 6.9%. The primary contributors to this rise are plastics, electrical machinery, and wood and paper products. The analysis highlights that manufacturers in Quebec, New Brunswick, and Ontario face the highest exposure, owing to their specific product mix.
Tariffs amplify Quebec’s manufacturing vulnerability
The economic effects on Quebec are further intensified by the province’s significant dependence on U.S. demand. Official statistics show that in 2025, Quebec’s merchandise exports to the United States totaled C$84.8 billion, accounting for 69.8% of its total international merchandise exports. While exports to the U.S. declined by 6.9% from 2024, exports to other nations increased by 10.6%. After experiencing a 0.1% decrease in the previous quarter, Quebec’s real GDP grew by 0.3% during the first quarter of 2026.
On a national level, Oxford Economics projects that the combined impact of the new U.S. tariffs and Canada’s planned retaliatory measures will reduce Canadian GDP by 0.3 percentage points in 2027 relative to the August baseline. Consumer prices are also expected to be about 0.3 percentage points higher next year. This analysis considers the cumulative effects of the Section 338 duties and Canada’s countermeasures, but does not characterize the C$1.8 billion figure for Quebec as a government budget loss.
Canada is preparing to implement matching counter-tariffs
Starting September 8, the Canadian government plans to impose counter-tariffs on C$27.6 billion worth of U.S. imports. These tariffs will mirror the U.S. rates of 15%, 25%, and 50%, targeting specific 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 affected by U.S. tariffs.
The Quebec government has issued updated guidance for local businesses regarding the U.S. tariffs and Canadian countermeasures. The province’s list includes the Section 338 tariffs alongside existing U.S. tariffs on steel, aluminum, and related products. These recent measures will increase costs across a broad range of Quebec exports, with the United States remaining the province’s primary foreign market. The C$1.8 billion estimate from Oxford Economics reflects the annual industrial output gap by 2028 in comparison to a scenario without the new tariffs.