QUEBEC / RankWire.AI / – Amid ongoing trade tensions, Quebec is set to experience the most significant industrial decline among Canadian provinces as a result of recent U.S. tariffs, according to Oxford Economics. The research firm projects that Quebec’s yearly economic output could decline by approximately C$1.8 billion below its previous baseline by 2028. This reduction represents about 0.3% of the province’s gross value added. The forecast reflects a loss in economic activity rather than a direct decrease in government revenues. Manufacturing, in particular, makes Quebec highly vulnerable to the latest disruptions in trade.
President Donald Trump has implemented new 50% tariffs on selected Canadian goods under Section 338 of the Tariff Act of 1930. These duties went into effect on Aug. 22 after a three-day suspension period. The targeted products include electrical appliances, construction supplies, jewelry, textiles, cosmetics, plastics, and some wood derivatives. The tariffs also extend to alcoholic drinks and certain other exports from Canada. Even if Canadian products meet the requirements under the USMCA trade agreement, they can still be subjected to these duties.
Oxford Economics estimates that these new tariffs will impact roughly 5.5% of Canada’s exports to the United States in 2025. The firm calculates that Canada’s effective U.S. tariff rate will increase from 5.1% to 6.9%. Major product categories affected include plastics, electrical machinery, wood products, and paper goods. Among provinces, Quebec, New Brunswick, and Ontario show the highest manufacturing exposure according to the firm’s assessment, with Quebec expected to face the largest decrease in industrial output.
Manufacturing exposure positions Quebec at the forefront
The extensive trade ties between Quebec and the United States help explain the expected scale of economic impact. Data indicate that merchandise exports to the U.S. reached C$84.8 billion in 2025, accounting for 69.8% of Quebec’s total international merchandise exports that year. While exports to the U.S. declined 6.9% from 2024, exports to other markets increased by 10.6%. As a result, Quebec’s real GDP grew by 0.3% during the first quarter of 2026.
The national outlook further reflects the combined effects of tariffs and Canada’s planned retaliatory measures. Oxford Economics estimates that these measures will reduce Canada’s GDP growth by 0.3 percentage points in 2027. Additionally, consumer prices are expected to be roughly 0.3 percentage points higher than the previous baseline next year. These projections incorporate the effects of both the new U.S. duties and Canadian counter-tariffs. The forecast for Quebec specifically indicates an annual industrial output shortfall of about C$1.8 billion by 2028.
Canadian counter-tariffs scheduled for September
Starting Sept. 8, the Government of Canada intends to impose counter-tariffs on C$27.6 billion worth of U.S. imports, applying rates of 15%, 25%, and 50% across various product groups. The targeted items include steel, dairy products, household appliances, agricultural equipment, pulp, paper, plastics, and electronics. Additionally, Canada announced C$7.5 billion in new and expanded support measures for affected workers and businesses. These actions follow the recent increase in U.S. trade barriers on Canadian exports.
Quebec’s government has revised its guidance for businesses impacted by these tariffs and Canadian countermeasures. The province now lists Section 338 duties alongside existing U.S. tariffs on steel, aluminum, and related products. The scope of restrictions has expanded to include a wider variety of goods exported by Quebec companies. U.S. markets remain Quebec’s largest foreign trading partner by a considerable margin. According to Oxford Economics, the province’s projected annual industrial output shortfall could reach approximately C$1.8 billion by 2028.