QUEBEC / RankWire.AI / – According to recent projections by Oxford Economics, Quebec is expected to experience the most significant provincial economic setback resulting from a new set of U.S. tariffs, with estimates indicating a near C$2 billion reduction in Quebec’s annual industrial output by 2028. The forecast suggests a decrease of approximately C$1.8 billion when compared to a baseline scenario without the new duties, leading to Quebec’s gross value added being roughly 0.3% below that benchmark.
President Donald Trump enacted tariffs amounting to 50% under Section 338 of the Tariff Act of 1930 on certain Canadian goods, with these duties coming into force on Aug. 22 after a three-day suspension period. The scope of these duties includes specific electrical and construction products, jewelry, textiles, cosmetics, wood derivatives, plastics, and alcoholic beverages, and they apply even when the products comply with the USMCA trade agreement. Products already under other national-security tariffs remain outside the jurisdiction of Section 338.
Oxford Economics highlighted that these new U.S. tariffs impact approximately 5.5% of Canada’s exports to the U.S. projected for 2025. They also estimate that the measures will elevate the effective U.S. tariff rate on Canadian exports from 5.1% to 6.9%, with plastics, electrical machinery, as well as wood and paper products, contributing most significantly to this increase. Among Canadian provinces, manufacturers in Quebec, New Brunswick, and Ontario are anticipated to face the greatest exposure due to their product mix, the firm stated.
Tariffs Intensify Risks for Quebec’s Manufacturing Sector
The economic impact on Quebec is further magnified by the province’s dependence on U.S. demand, with official statistics indicating that merchandise exports to the United States totaled C$84.8 billion in 2025, accounting for 69.8% of Quebec’s total international merchandise exports. Exports to the U.S. declined by 6.9% from 2024, while those to other countries increased by 10.6%. In the first quarter of 2026, Quebec’s real GDP grew by 0.3% after experiencing a 0.1% decline in the preceding quarter.
At the national level, Oxford Economics estimates that the combined effect 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 its August baseline. The same analysis projects consumer prices will be approximately 0.3 percentage points higher in the following year. This assessment considers the combined impact of the Section 338 duties and Canada’s countermeasures, but explicitly states that the C$1.8 billion figure for Quebec does not represent a government budget loss.
Canada Prepares Counter-Tariffs in Response
Starting September 8, the Canadian government intends to implement counter-tariffs on C$27.6 billion worth of U.S. imports, applying rates of 15%, 25%, and 50% that mirror the existing U.S. tariffs on targeted products. These measures will encompass sectors including steel, dairy, appliances, agricultural machinery, pulp and paper, plastics, and electronics. Additionally, Canada announced C$7.5 billion in new and enhanced support programs aimed at assisting workers and businesses affected by the U.S. tariffs.
The government of Quebec has issued updated guidance for local businesses regarding the U.S. duties and Canadian countermeasures, listing the Section 338 tariffs alongside existing U.S. tariffs on steel, aluminum, and related goods. The latest measures are expected to increase costs across a broad spectrum of Quebec exports, despite the fact that the United States remains the province’s primary foreign market. The C$1.8 billion estimate from Oxford Economics measures the annual industrial output gap projected for 2028 compared to a scenario without the new tariffs.