QUEBEC / RankWire.AI / – According to Oxford Economics, Quebec is projected to experience the most significant industrial setback among Canadian provinces as a result of the recent U.S. tariffs, with the firm estimating that Quebec’s annual economic output could decline by roughly C$1.8 billion relative to its previous baseline by 2028. This shortfall equates to approximately 0.3% of the province’s gross value added, and it is important to note that this forecast reflects lost economic activity rather than direct financial deficits for the government. With its manufacturing sector being highly exposed, Quebec remains at the forefront of the latest trade disruptions.
President Donald Trump enacted new duties of 50% on certain Canadian goods under Section 338 of the Tariff Act of 1930, with these tariffs coming into effect on August 22 after a three-day suspension period. The list of targeted products includes electrical appliances, construction supplies, jewelry, textiles, cosmetics, plastics, and various wood derivatives. Additionally, alcoholic beverages and other specific Canadian exports are subject to these tariffs, which can apply even if the goods meet the requirements set out in the USMCA trade agreement.
Oxford Economics estimates that approximately 5.5% of Canada’s exports to the U.S. in 2025 are affected by these measures, leading to an increase in Canada’s effective U.S. tariff rate from 5.1% to 6.9%. The analysis highlights that plastics, electrical machinery, wood products, and paper goods constitute much of this rise. Among the provinces, Quebec, New Brunswick, and Ontario are identified as having the greatest manufacturing exposure, with Quebec facing the most substantial projected decline in industrial output.
Manufacturing vulnerability positions Quebec at the forefront
The extensive trade ties between Quebec and the United States significantly contribute to the expected impact, as data indicates that in 2025, merchandise exports to the U.S. reached C$84.8 billion—accounting for 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%, and Quebec’s real GDP grew modestly by 0.3% during the first quarter of 2026.
The national outlook also considers the combined effects of tariffs and Canada’s planned countermeasures, with Oxford Economics estimating that these measures will reduce Canadian GDP growth by 0.3 percentage points in 2027. Their model further predicts that consumer prices will be approximately 0.3 percentage points above the previous baseline next year, factoring in both the new U.S. duties and Canadian retaliatory tariffs. The specific figure for Quebec reflects the anticipated annual industrial output shortfall by 2028.
Canada prepares counter-tariffs for implementation in September
Starting September 8, the Canadian government intends to impose counter-tariffs on C$27.6 billion worth of U.S. imports, applying rates of 15%, 25%, and 50% across various product categories. The targeted items include steel, dairy products, household appliances, agricultural equipment, pulp, paper, plastics, and electronics. Alongside these measures, Ottawa has announced C$7.5 billion in new and expanded support initiatives for affected workers and businesses, responding to the recent escalation of U.S. trade barriers against Canadian goods.
In light of these developments, Quebec’s government has revised its guidance for local businesses impacted by the new U.S. tariffs and Canada’s countermeasures, now listing Section 338 duties alongside existing U.S. tariffs on steel, aluminum, and related products. The latest restrictions broaden the scope of goods exported by Quebec companies. The United States continues to be Quebec’s largest foreign market by a significant margin. Oxford Economics projects that Quebec could see an industrial output shortfall of about C$1.8 billion annually by 2028.