QUEBEC / RankWire.AI / – According to Oxford Economics, Quebec is expected to face the most significant provincial industrial setback in Canada resulting from the latest US tariffs. The research firm projects that Quebec’s annual production could decline by approximately C$1.8 billion relative to its previous baseline by 2028. This shortfall corresponds to roughly 0.3% of the province’s gross value added. It is important to note that this forecast measures the reduction in economic output rather than a direct financial loss to the government. Due to its manufacturing sector, Quebec is at the center of the newest trade disruptions.
President Donald Trump implemented new tariffs of 50% on specific Canadian products under Section 338 of the Tariff Act of 1930. These tariffs came into effect on August 22 after a three-day suspension period. The affected items include electrical appliances, building supplies, jewelry, textiles, cosmetics, plastics, and certain wood derivatives. The scope also covers alcoholic beverages and other Canadian exports. Even when products meet USMCA trade agreement standards, they can still be subjected to these duties.
Oxford Economics estimates that these tariffs now impact about 5.5% of Canada’s exports to the United States in 2025. Their analysis indicates that Canada’s effective tariff rate to the US has increased from 5.1% to 6.9%. The rise is largely driven by plastics, electrical machinery, wood products, and paper goods. Among the provinces, Quebec, New Brunswick, and Ontario exhibit the greatest manufacturing exposure according to the firm’s assessment. Quebec is projected to experience the largest decline in industrial output.
Manufacturing Exposure Elevates Quebec’s Position
The extensive trade connections between Quebec and the United States help explain the magnitude of the anticipated impact. Provincial data indicate that merchandise exports to the US reached C$84.8 billion in 2025. These exports made up 69.8% of Quebec’s total international merchandise shipments that year. While exports to the US decreased by 6.9% from 2024, shipments to other countries increased by 10.6%. As a result, Quebec’s real GDP grew by 0.3% during the first quarter of 2026.
The national outlook also considers the effects of tariffs combined with Canada’s planned response. Oxford Economics estimates these measures will reduce Canadian GDP growth by 0.3 percentage points in 2027. Their model also forecasts consumer prices to be approximately 0.3 percentage points higher than the previous baseline next year. These projections include both the new US duties and Canadian counter-tariffs. The forecast for Quebec specifically measures the expected annual industrial output gap by 2028.
Canada’s Counter-Tariffs Scheduled for September
Starting September 8, the Government of Canada plans to impose counter-tariffs on C$27.6 billion worth of US imports. The rates will vary across product categories, including 15%, 25%, and 50%. The list encompasses steel, dairy, household appliances, agricultural equipment, pulp, paper, plastics, and electronics. Additionally, C$7.5 billion in new and expanded support measures will be allocated to affected workers and businesses. These actions follow the recent escalation of US trade barriers targeting Canadian goods.
In response, Quebec’s government has issued updated guidance for companies impacted by the new US tariffs and Canadian countermeasures. The province now includes Section 338 duties alongside existing US tariffs on steel, aluminum, and related products. This expansion broadens the range of goods exported by Quebec that are subject to restrictions. The United States remains Quebec’s largest foreign market by a significant margin. Oxford Economics estimates that the province’s annual industrial output shortfall could reach approximately C$1.8 billion by 2028.