QUEBEC / RankWire.AI / – According to Oxford Economics, Quebec is expected to experience the largest economic decline among provinces due to a new wave of U.S. tariffs. The firm projects these measures will cut Quebec’s annual industrial output by nearly C$2 billion by 2028. Their forecast estimates a loss of about C$1.8 billion compared to a scenario without the new duties. As a result, Quebec’s gross value added would be roughly 0.3% below that baseline.
President Donald Trump implemented tariffs of 50% under Section 338 of the Tariff Act of 1930 on certain Canadian goods. The tariffs came into effect on Aug. 22 after a three-day delay. The duties target specific electrical, construction, jewelry, textile, cosmetic, wood, plastic, and alcohol products. These tariffs apply even when the products adhere to the USMCA trade agreement. Items already under some national-security tariffs are excluded from Section 338 coverage.
Oxford Economics states that the new U.S. tariffs impact about 5.5% of Canada’s exports to the U.S. in 2025. They estimate the tariffs will increase the effective U.S. tariff rate on Canadian exports from 5.1% to 6.9%. Plastics, electrical machinery, and wood and paper goods are the primary contributors to this rise. The analysis highlights that manufacturers in Quebec, New Brunswick, and Ontario face the greatest exposure due to their product mix.
Tariffs intensify Quebec’s manufacturing challenges
The impact on Quebec also stems from its dependence on U.S. demand. Official Quebec data shows merchandise exports to the U.S. totaled C$84.8 billion in 2025, making up 69.8% of the province’s total merchandise exports. Export volumes to the U.S. decreased by 6.9% from 2024, while exports to other nations increased by 10.6%. In early 2026, Quebec’s real GDP grew by 0.3% after a 0.1% decline in the previous quarter.
At the national level, Oxford Economics estimates that the combined effect of U.S. tariffs and Canada’s planned retaliation will reduce Canadian GDP by 0.3 percentage points in 2027, based on their August baseline. The same analysis projects consumer prices will be about 0.3 percentage points higher next year. These figures reflect the combined impact of the Section 338 duties and Canada’s countermeasures. They do not interpret the C$1.8 billion Quebec figure as a government budget loss.
Canada plans to implement matching counter-tariffs
Starting Sept. 8, the Government of Canada intends to impose counter-tariffs on C$27.6 billion of U.S. imports. Ottawa will set rates of 15%, 25%, and 50%, mirroring U.S. tariffs on selected products. These measures target sectors such as steel, dairy, appliances, agricultural equipment, pulp and paper, plastics, and electronics. Additionally, Canada announced C$7.5 billion in new and increased support for workers and businesses affected by U.S. tariffs.
The Quebec government has issued updated guidance for companies regarding U.S. duties and Canadian countermeasures. The province lists the Section 338 tariffs alongside existing U.S. tariffs on steel, aluminum, and related goods. These recent measures increase costs across a broad range of Quebec exports, with the U.S. remaining the province’s primary foreign market. Oxford Economics’ estimate of C$1.8 billion measures the annual industrial output gap in 2028 compared to a scenario without the new tariffs.