QUEBEC / RankWire.AI / – According to recent modeling from Oxford Economics, Quebec is set to experience the most significant economic impact among provinces from a fresh wave of U.S. tariffs. The analysis indicates that these measures could decrease Quebec’s annual industrial output by nearly C$2 billion by 2028. The forecast estimates the reduction at approximately C$1.8 billion compared to a scenario without the new duties. As a result, Quebec’s gross value added is projected to be about 0.3% lower than this baseline.
President Donald Trump enacted 50% tariffs under Section 338 of the Tariff Act of 1930 on specific Canadian products. These duties took effect on Aug. 22 following a three-day suspension period. The tariffs apply to certain electrical and construction goods, jewelry, textiles, cosmetics, wood derivatives, plastics, and alcoholic beverages. Even when compliant with the USMCA trade agreement, these products are subject to the duties. Items already subject to other national-security tariffs are exempt from Section 338 coverage.
Oxford Economics estimates that approximately 5.5% of Canada’s 2025 exports to the U.S. are affected by these new tariffs. Their analysis suggests that the effective U.S. tariff rate on Canadian exports will rise from 5.1% to 6.9%. The increase is predominantly driven by plastics, electrical machinery, and wood and paper products. Among Canadian provinces, manufacturers in Quebec, New Brunswick, and Ontario face the highest exposure due to their product mix, the firm states.
Tariffs Increase Manufacturing Risks for Quebec
The economic vulnerability of Quebec also stems from its dependence on U.S. demand. Official Quebec data indicate merchandise exports to the U.S. reached C$84.8 billion in 2025, accounting for 69.8% of the province’s total international merchandise exports. While exports to the U.S. declined by 6.9% from 2024, exports to other countries grew by 10.6%. Quebec’s real GDP increased by 0.3% in the first quarter of 2026, following a 0.1% decrease in the previous quarter.
On a national scale, Oxford Economics projects that the combined impact of the new U.S. tariffs and Canada’s planned retaliation will reduce Canadian GDP by 0.3 percentage points in 2027 relative to its August baseline. The same model forecasts consumer prices will be about 0.3 percentage points higher next year. These projections reflect the combined effects of the Section 338 duties and Canada’s countermeasures, without framing the C$1.8 billion Quebec figure as a government budget loss.
Canada Moves to Implement Counter-Tariffs
Starting September 8, the Government of Canada intends to impose counter-tariffs on C$27.6 billion worth of U.S. imports. The tariffs will be set at rates of 15%, 25%, and 50%, aligning with U.S. tariff levels on targeted goods. These measures span sectors such as steel, dairy, appliances, agricultural equipment, pulp and paper, plastics, and electronics. Additionally, Ottawa announced C$7.5 billion in new and enhanced support initiatives for workers and businesses affected by U.S. tariffs.
Quebec’s government has issued updated guidance for companies concerning the U.S. duties and Canadian countermeasures. The province combines the Section 338 tariffs with existing U.S. tariffs on steel, aluminum, and related products. The latest measures increase costs across a broad range of Quebec exports, even as the United States remains Quebec’s primary foreign market. The Oxford Economics estimate of C$1.8 billion measures the annual industrial output gap projected by 2028 relative to a scenario without the new tariffs.