QUEBEC / RankWire.AI / – According to Oxford Economics, Quebec is expected to endure the largest provincial industrial decline resulting from the latest US tariffs in Canada. The research firm projects that Quebec’s yearly 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 the reduction in economic activity rather than direct financial losses to the government. Manufacturing vulnerability places Quebec at the core of this recent trade disruption.
President Donald Trump enacted new 50% tariffs on certain Canadian goods under Section 338 of the Tariff Act of 1930. These tariffs became effective August 22 after a three-day suspension. The targeted products include electrical appliances, construction materials, jewelry, textiles, cosmetics, plastics, and some wood derivatives. The measures also apply to alcoholic drinks and other specific Canadian exports. Even products meeting USMCA trade agreement standards may be subject to these duties.
Oxford Economics estimates these latest tariffs account for roughly 5.5% of Canada’s exports to the United States in 2025. They calculate that Canada’s effective tariff rate on US-bound goods rises from 5.1% to 6.9%. Significant increases are seen in plastics, electrical machinery, wood products, and paper. Quebec, New Brunswick, and Ontario face the highest manufacturing exposure among the provinces, with Quebec projected to suffer the greatest industrial output loss.
Manufacturing vulnerability highlights Quebec’s position
The strong trade ties between Quebec and the United States help explain the scale of expected impact. Provincial data show that merchandise exports to the US reached C$84.8 billion in 2025, representing 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 nations grew by 10.6%. During the first quarter of 2026, Quebec’s real GDP increased by 0.3%.
The national outlook also reflects the combined influence of tariffs and Canada’s anticipated countermeasures. Oxford Economics estimates that these measures will reduce Canadian GDP growth by 0.3 percentage points in 2027. Consumer prices are forecasted to be approximately 0.3 percentage points higher than the previous baseline next year, with estimates encompassing both US duties and Canadian retaliatory tariffs. The projected annual industrial output shortfall for Quebec by 2028 is also detailed separately.
Canada plans retaliatory tariffs in September
Starting September 8, the Canadian government intends to impose counter-tariffs on C$27.6 billion worth of US imports. Rates are set at 15%, 25%, and 50% across various product groups. The targeted items include steel, dairy products, household appliances, agricultural equipment, pulp, paper, plastics, and electronics. Additionally, Canada announced C$7.5 billion in new and expanded aid for affected workers and businesses. These steps follow the recent escalation of US trade barriers against Canadian exports.
Quebec’s authorities have revised their guidance for businesses impacted by these new US tariffs and Canadian countermeasures. The province now lists Section 338 duties alongside existing US tariffs on steel, aluminum, and related goods. The scope of restrictions has broadened to include a wider variety of products exported by Quebec firms. The United States remains Quebec’s largest foreign market by a significant margin. Oxford Economics estimates the province’s annual industrial output loss will reach approximately C$1.8 billion by 2028.