QUEBEC / RankWire.AI / – According to Oxford Economics, Quebec is set to experience the largest provincial economic decline among Canadian regions as a result of a new wave of U.S. tariffs. The analysis projects that these measures could cut Quebec’s annual industrial output by nearly C$2 billion by 2028, with an estimated decrease of about C$1.8 billion compared to a scenario without the additional duties. Consequently, Quebec’s gross value added would be approximately 0.3% below that baseline.
President Donald Trump implemented 50% tariffs under Section 338 of the Tariff Act of 1930 on selected Canadian products. These duties came into effect on Aug. 22 after a three-day suspension and encompass specific electrical and construction goods, jewelry, textiles, cosmetics, wood derivatives, plastics, and alcoholic beverages. The U.S. tariffs apply to affected products even when they are compliant with the USMCA trade agreement. Items already subject to separate national-security tariffs are excluded from Section 338 coverage.
Oxford Economics indicates that these new U.S. tariffs account for roughly 5.5% of Canada’s projected exports to the United States in 2025. The analysis estimates that these measures will increase the effective U.S. tariff rate on Canadian exports from 5.1% to 6.9%. The biggest contributors to this rise are plastics, electrical machinery, and wood and paper products. The firm also notes that manufacturers in Quebec, New Brunswick, and Ontario face the greatest exposure among Canadian provinces because of their product mix.
Tariffs heighten Quebec’s manufacturing vulnerability
The economic impact on Quebec is also intensified by the province’s heavy dependence on U.S. demand. Official statistics reveal that Quebec’s merchandise exports to the U.S. reached C$84.8 billion in 2025, representing 69.8% of its total international merchandise exports. While exports to the U.S. declined by 6.9% from 2024, exports to other markets increased by 10.6%. In the first quarter of 2026, Quebec’s real GDP grew by 0.3% after a 0.1% contraction in the previous quarter.
On a national level, Oxford Economics estimates that the combination of U.S. tariffs and Canada’s planned retaliations will reduce Canadian GDP by 0.3 percentage points in 2027 from its August baseline. Their modeling also projects a rise of about 0.3 percentage points in consumer prices next year. This analysis considers the joint effects of the Section 338 duties and Canada’s countermeasures, but does not interpret the C$1.8 billion figure for Quebec as a government budget loss.
Canada prepares to implement reciprocal counter-tariffs
Starting September 8, the Canadian government plans to impose counter-tariffs on C$27.6 billion worth of U.S. imports. Ottawa intends to apply rates of 15%, 25%, and 50%, aligning with the U.S. tariffs on specific products. These measures will target industries including steel, dairy, appliances, agricultural equipment, pulp and paper, plastics, and electronics. Additionally, Canada announced C$7.5 billion in new and enhanced support measures for workers and businesses impacted by U.S. tariffs.
The Quebec government has released updated guidance for local companies regarding the U.S. duties and Canadian responses. The province lists the Section 338 tariffs alongside existing U.S. tariffs on steel, aluminum, and related products. These recent measures increase costs across a broad range of Quebec exports, even as the United States remains the province’s primary foreign market. The C$1.8 billion annual industrial output loss estimate from Oxford Economics measures the expected gap by 2028 relative to a scenario without the new tariffs.