QUEBEC / RankWire.AI / – According to recent models from Oxford Economics, Quebec is expected to experience the largest provincial economic decline due to a fresh wave of U.S. tariffs. The firm projects that these measures will cut Quebec’s annual industrial output by nearly C$2 billion by the year 2028. Their forecast indicates a reduction of about C$1.8 billion in output compared to a baseline scenario without the new duties. As a result, Quebec’s gross value added would be approximately 0.3% below that baseline.
President Donald Trump enacted 50% tariffs under Section 338 of the Tariff Act of 1930 on specific Canadian goods. These duties came into effect on Aug. 22, following a three-day suspension. The tariffs target certain electrical and construction products, jewelry, textiles, cosmetics, wood derivatives, plastics, and alcoholic beverages. Even if these products comply with the USMCA trade agreement, they remain subject to the duties. Items already under some national-security tariffs are excluded from Section 338 coverage.
Oxford Economics estimates that the new U.S. tariffs will impact roughly 5.5% of Canada’s exports to the United States in 2025. They project that these measures will increase the effective U.S. tariff rate on Canadian exports from 5.1% to 6.9%. The sectors contributing most to this rise are plastics, electrical machinery, and wood and paper products. According to the firm, manufacturers in Quebec, New Brunswick, and Ontario face the greatest exposure among Canadian provinces due to the specific product mix targeted by the tariffs.
Tariffs heighten manufacturing risks in Quebec
The economic impact on Quebec is also driven by its dependence on U.S. demand. Official statistics show that merchandise exports to the U.S. totaled C$84.8 billion in 2025, making up 69.8% of Quebec’s total merchandise exports abroad. While exports to the U.S. declined by 6.9% from 2024, exports to other countries increased by 10.6%. After experiencing a 0.1% decline in the previous quarter, Quebec’s real GDP grew by 0.3% in the first quarter of 2026.
At the national level, Oxford Economics estimates that the combined effect of the new U.S. tariffs and Canada’s planned retaliation will reduce Canadian GDP by 0.3 percentage points in 2027 relative to its August baseline. The same analysis predicts consumer prices will be approximately 0.3 percentage points higher next year. This assessment reflects the cumulative impact of the Section 338 duties and Canada’s countermeasures, but does not frame the C$1.8 billion loss for Quebec as a government budget deficit.
Canada prepares retaliatory tariffs of equal measure
Beginning September 8, the Government of Canada intends to impose counter-tariffs on C$27.6 billion worth of U.S. imports. These tariffs will be set at rates of 15%, 25%, and 50%, matching the U.S. tariffs on targeted products. The measures will affect sectors such as steel, dairy, appliances, agricultural equipment, pulp and paper, plastics, and electronics. Additionally, Canada announced C$7.5 billion in new and enhanced support for workers and businesses impacted by U.S. tariffs.
The Quebec government has issued updated guidance for local companies regarding the U.S. duties and Canadian countermeasures. The province lists the Section 338 tariffs alongside existing U.S. tariffs on steel, aluminum, and related products. The latest measures impose additional costs across a broad range of Quebec exports, even as the United States remains Quebec’s primary foreign market. The C$1.8 billion figure from Oxford Economics reflects the annual industrial output shortfall by 2028 in comparison to a scenario without these new tariffs.