QUEBEC / RankWire.AI / – As of 2028, Quebec is projected to bear Canada’s most significant provincial economic setback resulting from the recent U.S. tariffs, according to Oxford Economics. The consultancy estimates that Quebec’s yearly output could decline by approximately C$1.8 billion relative to its previous baseline. This shortfall represents about 0.3% of the province’s gross value added. The forecast specifically measures the reduction in economic output rather than a direct financial loss to the government. Manufacturing sectors’ vulnerability places Quebec at the heart of the latest trade upheaval.
Earlier this year, President Donald Trump implemented new tariffs of 50% on selected Canadian products under Section 338 of the Tariff Act of 1930. These duties became effective on August 22 after a three-day suspension period. The tariffs target a variety of items, including electrical equipment, building materials, jewelry, textiles, cosmetics, plastics, and certain wood derivatives. Additionally, alcoholic beverages and other Canadian exports are affected. Even products that meet the criteria under the USMCA trade agreement may face these duties.
Oxford Economics estimates that these latest measures impact roughly 5.5% of Canada’s exports to the U.S. in 2025. The analysis indicates that Canada’s effective tariff rate to the U.S. has increased from 5.1% to 6.9%. A significant portion of this rise is due to plastics, electrical machinery, wood products, and paper goods. Among the provinces, Quebec, New Brunswick, and Ontario show the highest manufacturing exposure, with Quebec expected to experience the largest drop in industrial output.
Manufacturing vulnerability positions Quebec at the forefront
The extensive trade connections between Quebec and the United States partly explain the magnitude of the expected impact. In 2025, merchandise exports to the U.S. reached C$84.8 billion, accounting for 69.8% of Quebec’s total international merchandise exports that year. While exports to the U.S. decreased by 6.9% from 2024, exports to other countries grew by 10.6%. During the first quarter of 2026, Quebec’s real GDP increased by 0.3%.
The national outlook also reflects the influence of tariffs and Canada’s planned responses. Oxford Economics projects that combined measures will reduce Canadian GDP growth by 0.3 percentage points in 2027. Its models also forecast consumer prices to be approximately 0.3 percentage points higher than the baseline next year. These estimates incorporate both the new U.S. duties and Canadian retaliatory tariffs. The forecast for Quebec additionally highlights the anticipated annual industrial output gap by 2028.
Canada prepares counter-tariffs for September implementation
Starting September 8, the Government of Canada plans to impose counter-tariffs on C$27.6 billion worth of U.S. imports. The rates are set at 15%, 25%, and 50% across various product categories. The list includes steel, dairy, household appliances, agricultural equipment, pulp, paper, plastics, and electronics. Additionally, Canada announced a new and expanded support package worth C$7.5 billion for workers and businesses affected by the measures. These steps follow the recent escalation of U.S. trade barriers against Canadian goods.
Quebec’s authorities have updated their guidance for businesses impacted by both the new U.S. tariffs and Canadian countermeasures. The province now includes Section 338 duties alongside existing tariffs on steel, aluminum, and related products. The scope of restrictions has expanded to cover a broader range of goods exported by Quebec firms. Despite these developments, the United States remains Quebec’s largest international market by a significant margin. Oxford Economics estimates the province’s projected annual industrial output loss will reach about C$1.8 billion by 2028.