QUEBEC / RankWire.AI / – According to new projections from Oxford Economics, Quebec is set to suffer the most significant provincial economic setback due to a recent round of U.S. tariffs. The analysis predicts that by 2028, these measures will decrease Quebec’s yearly industrial output by nearly C$2 billion, with an estimated loss of approximately C$1.8 billion compared to a scenario without the new tariffs. Consequently, Quebec’s gross value added could drop roughly 0.3% below the baseline.
President Donald Trump enacted a 50% tariff under Section 338 of the Tariff Act of 1930 on selected Canadian goods. These duties took effect on Aug. 22 after a three-day suspension period and apply to certain electrical and construction products, jewelry, textiles, cosmetics, wood derivatives, plastics, and alcoholic beverages. The tariffs apply even when products comply with the USMCA trade agreement, although some items under national-security tariffs remain outside Section 338’s scope.
Oxford Economics reports that these new U.S. tariffs encompass around 5.5% of Canada’s exports to the U.S. in 2025. They are estimated to raise the effective U.S. tariff rate on Canadian exports from 5.1% to 6.9%, with plastics, electrical machinery, and wood and paper products making the largest contribution to this increase. Among Canadian provinces, manufacturers in Quebec, New Brunswick, and Ontario face the greatest exposure due to their product mix, the firm states.
Tariffs Intensify Manufacturing Risks for Quebec
Quebec’s economic vulnerability is further heightened by its dependence on U.S. demand. Data from Quebec shows merchandise exports to the U.S. reached C$84.8 billion in 2025, accounting for 69.8% of its total international merchandise exports. While exports to the U.S. declined 6.9% from 2024, exports to other nations increased by 10.6%. In the first quarter of 2026, Quebec’s real GDP experienced a modest growth of 0.3%, following a 0.1% decline in the previous quarter.
On a national level, Oxford Economics estimates that the combined effects of 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 projected to be about 0.3 percentage points higher next year. The analysis considers the cumulative impact of Section 338 duties and Canadian countermeasures, but does not describe the C$1.8 billion figure for Quebec as a government budget deficit.
Canada Moves Toward Counter-Tariffs Matching U.S. Measures
Starting September 8, Canada plans to impose counter-tariffs on C$27.6 billion worth of U.S. imports. Ottawa intends to set rates of 15%, 25%, and 50%, aligning with U.S. tariffs on targeted goods. These 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 initiatives for workers and businesses impacted by the tariffs.
The Quebec government has issued updated guidance for local companies regarding U.S. tariffs and Canadian countermeasures. The province details the Section 338 tariffs alongside existing U.S. tariffs on steel, aluminum, and related products. These new measures increase costs across a broad range of Quebec exports, with the United States remaining the province’s primary foreign market. Oxford Economics’ estimate of a C$1.8 billion annual industrial output gap by 2028 compares this scenario to a baseline without the new tariffs.