QUEBEC / RankWire.AI / – According to Oxford Economics, Quebec is likely to suffer the most significant provincial industrial setback in Canada due to the recent US tariffs. The research firm projects that Quebec’s yearly production could decline by approximately C$1.8 billion below its previous baseline by the year 2028. This shortfall represents roughly 0.3% of the province’s gross value added. It is important to note that this forecast measures the loss in economic output rather than a direct reduction in government revenue. The province’s manufacturing sector makes Quebec particularly vulnerable in the context of this latest trade disruption.
President Donald Trump imposed new tariffs of 50% on certain Canadian imports under Section 338 of the Tariff Act of 1930, with the measures coming into effect on August 22 after a three-day suspension. These tariffs target a range of products, including electrical goods, construction materials, jewelry, textiles, cosmetics, plastics, and some wood derivatives. Additionally, alcoholic beverages and other Canadian exports are affected. Even products that comply with USMCA trade rules are susceptible to these duties, complicating trade flows.
Oxford Economics estimates that these latest tariffs impact about 5.5% of Canada’s exports to the US in 2025. The firm also calculates that Canada’s effective tariff rate on US-bound goods will increase from 5.1% to 6.9%. Significant portions of this rise come from plastics, electrical machinery, wood products, and paper goods. Among the provinces, Quebec, New Brunswick, and Ontario face the greatest manufacturing exposure, with Quebec expected to experience the largest decline in industrial output.
Manufacturing Exposure Highlights Quebec’s Vulnerability
Quebec’s substantial trade ties with the United States largely explain the magnitude of its projected economic impact. Data indicate that merchandise exports to the US amounted to C$84.8 billion in 2025, accounting for 69.8% of Quebec’s total international merchandise exports that year. While exports to the US decreased by 6.9% from 2024, exports to other countries increased by 10.6%. Consequently, Quebec’s real GDP grew by 0.3% during the first quarter of 2026.
The national outlook also considers the effects of tariffs and Canada’s planned retaliatory measures. Oxford Economics estimates that combined, these actions will reduce Canadian GDP growth by 0.3 percentage points in 2027. Their model also indicates that consumer prices will be about 0.3 percentage points higher than the baseline next year. These projections include both the new US duties and the Canadian counter-tariffs. The forecast specifically estimates Quebec’s annual industrial output gap by 2028.
Canada Prepares for Counter-Tariffs in September
Starting September 8, the Government of Canada plans to implement counter-tariffs on C$27.6 billion worth of US imports, with rates set at 15%, 25%, and 50% depending on the product group. The targeted items include steel, dairy products, household appliances, agricultural equipment, pulp, paper, plastics, and electronics. Alongside these measures, Canada announced C$7.5 billion in new and expanded support for affected workers and businesses. These steps follow the recent escalation of US trade barriers against Canadian goods.
In response, Quebec’s government has revised its guidelines for businesses impacted by these new tariffs and countermeasures. The province now lists Section 338 duties alongside existing US tariffs on steel, aluminum, and related products. The scope of restrictions has broadened, affecting a wider range of goods exported by Quebec companies. The United States remains Quebec’s largest foreign market by a wide margin. Oxford Economics projects that Quebec’s annual industrial output shortfall could reach about C$1.8 billion by 2028, reflecting the ongoing trade tensions.