QUEBEC / RankWire.AI / – According to Oxford Economics, Quebec is poised to experience the largest provincial industrial decline in Canada as a result of the recent U.S. tariffs. The research firm projects that Quebec’s annual economic output might decrease by roughly C$1.8 billion below its previous baseline by 2028. This figure represents approximately 0.3% of the province’s gross value added. It’s important to note that this forecast reflects lost economic activity rather than direct government revenue losses. Manufacturing’s significant exposure to trade disruptions positions Quebec at the forefront of the economic impact.
President Donald Trump implemented new 50% tariffs on certain Canadian goods under Section 338 of the Tariff Act of 1930. These duties took effect on August 22 after a three-day suspension. The tariffs target a range of products, including electrical equipment, construction materials, jewelry, textiles, cosmetics, plastics, and some wood-based items. They also apply to alcoholic beverages and other Canadian exports, even when these products meet the requirements of the USMCA trade agreement.
Oxford Economics estimates that these recent measures account for about 5.5% of Canada’s exports to the United States in 2025. The firm calculates that Canada’s effective U.S. tariff rate will increase from 5.1% to 6.9%. Much of this rise stems from plastics, electrical machinery, wood products, and paper goods. Among the provinces, Quebec, New Brunswick, and Ontario are most vulnerable due to their manufacturing sectors, with Quebec facing the largest projected decline in industrial output.
Manufacturing Vulnerability Positions Quebec as a Key Affected Region
The extensive trade connections between Quebec and the U.S. help explain the scale of the anticipated economic impact. Data indicates that Quebec’s merchandise exports to the U.S. reached C$84.8 billion in 2025, representing 69.8% of the province’s total international merchandise exports that year. While exports to the U.S. decreased by 6.9% from 2024, exports to other nations increased by 10.6%. During the first quarter of 2026, Quebec’s real GDP grew modestly by 0.3%.
The national outlook also considers the broader effects of tariffs and Canada’s planned responses. Oxford Economics estimates that combined measures will reduce Canada’s GDP growth by 0.3 percentage points in 2027. Additionally, consumer prices are projected to be about 0.3 percentage points higher than the previous baseline next year. These projections encompass both the new U.S. duties and Canadian counter-tariffs. Separate estimates for Quebec predict an annual industrial output shortfall of about C$1.8 billion by 2028.
Canadian Counter-Tariffs Scheduled for September Implementation
Starting September 8, the Government of Canada plans to impose counter-tariffs on C$27.6 billion worth of U.S. imports. These measures involve tariff rates of 15%, 25%, and 50% across various product categories. The affected goods include steel, dairy products, household appliances, agricultural equipment, pulp, paper, plastics, and electronics. Canada also announced C$7.5 billion in new and expanded support initiatives for workers and businesses impacted by these trade measures. These steps follow the recent escalation in U.S. trade barriers targeting Canadian exports.
Quebec’s government has revised its guidance for local businesses affected by the new U.S. tariffs and Canadian countermeasures. The province now lists Section 338 duties alongside existing U.S. tariffs on steel, aluminum, and related products. The scope of restrictions has expanded to include a broader range of goods exported by Quebec firms. The United States remains Quebec’s leading foreign market, and Oxford Economics estimates that the province could face an annual industrial output shortfall of around C$1.8 billion by 2028.