QUEBEC / RankWire.AI / – According to recent models from Oxford Economics, Quebec is set to experience the largest economic decline among provinces due to a fresh wave of U.S. tariffs. The firm projects that these measures will decrease Quebec’s yearly industrial output by nearly C$2 billion by 2028, with a forecasted loss of approximately C$1.8 billion compared to a scenario without the new tariffs. Consequently, Quebec’s gross value added would be roughly 0.3% below that baseline.
President Donald Trump imposed 50% tariffs under Section 338 of the Tariff Act of 1930 on specific Canadian goods. The duties, which took effect on Aug. 22 following a three-day suspension, target certain electrical and construction materials, jewelry, textiles, cosmetics, wood derivatives, plastics, and alcoholic beverages. These U.S. measures are applicable to the covered products even when they meet the USMCA trade agreement standards. Products already subject to other national-security tariffs are excluded from Section 338 coverage.
Oxford Economics indicates that these new U.S. tariffs encompass roughly 5.5% of Canada’s exports to the United States in 2025. The modeling suggests that these measures will push the effective U.S. tariff rate on Canadian exports from 5.1% to 6.9%, with plastics, electrical machinery, and wood and paper products making the largest contributions to this increase. The analysis also notes that manufacturers in Quebec, New Brunswick, and Ontario are most vulnerable among Canadian provinces due to their specific product mixes.
Tariffs Intensify Exposure in Quebec’s Manufacturing Sector
This provincial vulnerability is further amplified by Quebec’s heavy dependence on U.S. demand. Official statistics indicate that in 2025, merchandise exports to the U.S. totaled C$84.8 billion, accounting for 69.8% of Quebec’s total international merchandise exports. Although exports to the U.S. declined by 6.9% from 2024, exports to other markets increased by 10.6%. After a 0.1% decline in the previous quarter, Quebec’s real GDP grew by 0.3% in the first quarter of 2026.
On a national level, Oxford Economics estimates that the combined impact of the new U.S. tariffs and Canada’s planned retaliation will decrease Canadian GDP by 0.3 percentage points in 2027, compared to its August baseline. The same analysis forecasts consumer prices will be approximately 0.3 percentage points higher in the following year. The projections incorporate the combined effects of the Section 338 duties and Canada’s countermeasures, but do not interpret the C$1.8 billion figure for Quebec as a government budget loss.
Canada Moves to Implement Counter-Tariffs Matching U.S. Measures
Starting September 8, the Government of Canada intends to impose counter-tariffs on C$27.6 billion worth of U.S. imports. Ottawa’s planned rates of 15%, 25%, and 50% will mirror the U.S. tariffs on targeted 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 programs for workers and businesses impacted by U.S. tariffs.
The Quebec government has issued updated guidance for local companies regarding U.S. duties and Canadian responses. It lists the Section 338 tariffs alongside existing U.S. tariffs on steel, aluminum, and related products. These recent measures raise costs across a broad array of Quebec exports, while the United States continues to be the province’s primary foreign market. The C$1.8 billion estimate from Oxford Economics represents the annual industrial output gap by 2028 relative to a baseline without the new tariffs.