QUEBEC / RankWire.AI / – According to Oxford Economics, Quebec is likely to experience the largest provincial industrial setback in Canada resulting from the recent US tariffs. The research firm predicts that Quebec’s annual economic output could decline by approximately C$1.8 billion below its previous baseline by 2028. This shortfall represents about 0.3% of the province’s gross value added. The forecast focuses on lost economic activity rather than direct government revenue losses. Quebec’s manufacturing sector makes it particularly vulnerable amid the latest trade disruptions.
President Donald Trump introduced new tariffs of 50% on selected Canadian goods under Section 338 of the Tariff Act of 1930. These duties came into effect on Aug. 22 after a three-day suspension. The tariffs cover electrical appliances, construction materials, jewelry, textiles, cosmetics, plastics, and some wood products. The measures also target alcoholic drinks and other exports from Canada. Even goods meeting USMCA trade standards can face these duties.
Oxford Economics estimates these tariffs affect roughly 5.5% of Canada’s exports to the US in 2025. The firm calculates that Canada’s effective tariff rate on US-bound goods has increased from 5.1% to 6.9%. The main contributors to this rise are plastics, electrical machinery, wood products, and paper. Among provinces, Quebec, New Brunswick, and Ontario have the highest manufacturing exposure. Quebec is expected to see the greatest decline in industrial output.
Manufacturing vulnerability positions Quebec at the forefront
Quebec’s strong trade ties with the United States help explain the significant impact forecast. In 2025, merchandise exports to the US reached C$84.8 billion, accounting for 69.8% of Quebec’s total merchandise exports that year. Export values to the US decreased by 6.9% from 2024, while exports to other countries rose by 10.6%. During the first quarter of 2026, Quebec’s real GDP grew modestly by 0.3%.
The national outlook also reflects the combined impact of tariffs and Canada’s planned countermeasures. Oxford Economics estimates these measures will reduce Canadian GDP growth by 0.3 percentage points in 2027. Its model suggests consumer prices will be about 0.3 percentage points higher than the previous baseline next year. These projections account for both the new US duties and Canadian retaliatory tariffs. The forecast also separately estimates Quebec’s annual industrial output gap by 2028.
Canada plans retaliatory tariffs for September
Starting Sept. 8, the Canadian government plans to impose counter-tariffs on C$27.6 billion worth of US imports. Rates will range from 15% to 50%, depending on the product category. The targeted items include steel, dairy, household appliances, agricultural equipment, pulp, paper, plastics, and electronics. Additionally, Canada announced C$7.5 billion in new and expanded support for workers and businesses affected by these measures. These actions follow the latest US trade barriers introduced against Canadian goods.
Quebec’s government has updated its guidance for businesses 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. The new restrictions extend to a broader range of goods exported by Quebec firms. The US remains Quebec’s largest foreign market by far. Oxford Economics projects the province’s annual industrial output shortfall will reach about C$1.8 billion by 2028.