QUEBEC / RankWire.AI / – According to Oxford Economics, Quebec is expected to bear the largest provincial industrial setback in Canada resulting from the recent U.S. tariffs. The research firm projects Quebec’s yearly economic output could decline approximately C$1.8 billion below its previous baseline by 2028, which equates to roughly 0.3% of the province’s gross value added. This forecast focuses on lost economic activity rather than direct fiscal losses. Manufacturing exposure positions Quebec at the heart of the latest trade disturbances.
President Donald Trump enacted new 50% tariffs on selected Canadian goods under Section 338 of the Tariff Act of 1930. These duties began on Aug. 22 after a three-day suspension. Affected products include electrical appliances, construction supplies, jewelry, textiles, cosmetics, plastics, and certain wood products. The tariffs also extend to alcoholic beverages and other Canadian exports, even if they qualify under the USMCA trade agreement.
Oxford Economics estimates these measures affect about 5.5% of Canada’s exports to the U.S. in 2025. The firm calculates that Canada’s effective U.S. tariff rate will increase from 5.1% to 6.9%. Major contributions to this rise come from plastics, electrical machinery, wood goods, and paper products. Among provinces, Quebec, New Brunswick, and Ontario face the highest manufacturing exposure, with Quebec expected to experience the largest industrial output decline.
Manufacturing Exposure Highlights Quebec’s Frontline Role
Quebec’s extensive trade ties with the U.S. largely explain the significant projected impact. In 2025, merchandise exports to the U.S. totaled C$84.8 billion, representing 69.8% of Quebec’s total international merchandise exports that year. While exports to the U.S. decreased by 6.9% from 2024, exports to other nations increased by 10.6%. During the first quarter of 2026, Quebec’s real GDP grew modestly by 0.3%.
The national outlook also incorporates the effects of tariffs and Canada’s planned retaliation. Oxford Economics estimates that these combined measures will reduce Canadian GDP growth by 0.3 percentage points in 2027, with consumer prices predicted to be about 0.3 percentage points higher than previous projections next year. These forecasts account for both the new U.S. duties and Canadian counter-tariffs. The forecast for Quebec separately indicates an annual industrial output shortfall of approximately C$1.8 billion by 2028.
Canada Prepares for Countermeasures in September
Starting Sept. 8, Canada plans to impose counter-tariffs on C$27.6 billion worth of U.S. imports, with rates of 15%, 25%, and 50% across different product categories. The list includes steel, dairy, household appliances, agricultural machinery, 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 steps follow the recent escalation of U.S. trade barriers targeting Canadian exports.
Quebec’s government has issued updated guidance for businesses impacted by the new U.S. tariffs and Canadian countermeasures. The province now lists Section 338 duties alongside existing U.S. tariffs on steel, aluminum, and related products. The recent restrictions extend to a broader range of Quebec exports. U.S. markets remain Quebec’s largest foreign trading partner. Oxford Economics projects a C$1.8 billion shortfall in the province’s annual industrial output by 2028.