QUEBEC / RankWire.AI / – According to fresh analysis from Oxford Economics, Quebec faces the most significant economic downturn among provinces as a result of a new round of U.S. tariffs. The firm projects these measures will cut Quebec’s yearly industrial output by nearly C$2 billion by 2028. The forecast indicates a reduction of approximately C$1.8 billion compared to a scenario without the new tariffs, bringing Quebec’s gross value added about 0.3% below that baseline.
President Donald Trump imposed 50% tariffs under Section 338 of the Tariff Act of 1930 on selected Canadian products. The duties became effective on Aug. 22 after a three-day suspension. These tariffs affect certain electrical and construction goods, jewelry, textiles, cosmetics, wood derivatives, plastics, and alcoholic beverages. The U.S. measures apply even when the products comply with the USMCA trade agreement. Items already subject to some national-security tariffs are excluded from Section 338 coverage.
Oxford Economics reports that the new U.S. tariffs impact roughly 5.5% of Canada’s exports to the United States in 2025. They estimate these measures will increase the effective U.S. tariff rate on Canadian exports from 5.1% to 6.9%. Plastics, electrical machinery, and wood and paper products primarily drive this increase. Among provinces, Quebec, New Brunswick, and Ontario face the greatest exposure due to their product mix, according to the firm.
Tariffs Heighten Quebec’s Manufacturing Vulnerability
The provincial impact also stems from Quebec’s dependence on U.S. demand. Official statistics show that Quebec exported C$84.8 billion worth of merchandise to the U.S. in 2025, accounting for 69.8% of its total international merchandise exports. While exports to the U.S. declined 6.9% from 2024, exports to other nations 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 new U.S. tariffs combined with Canada’s planned retaliations will reduce Canadian GDP by 0.3 percentage points in 2027 from its August baseline. The same analysis predicts consumer prices will be roughly 0.3 percentage points higher next year. These projections consider the joint impact of the Section 338 duties and Canada’s countermeasures, but do not label the C$1.8 billion Quebec figure as a government budget loss.
Canada Readies Counter-Tariffs of Equal Value
Starting September 8, Canada plans to impose counter-tariffs on C$27.6 billion worth of U.S. imports. Ottawa will implement rates of 15%, 25%, and 50%, matching U.S. tariffs on targeted products. These measures target sectors 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.
Quebec’s government has issued updated guidance for businesses regarding 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 increase costs across a broad spectrum of Quebec exports, with the United States remaining its primary foreign market. Oxford Economics’ estimate of C$1.8 billion reflects the annual industrial output gap by 2028 compared to a baseline without the new tariffs.