QUEBEC / RankWire.AI / – A new analysis from Oxford Economics projects that Quebec will suffer the largest provincial economic impact from recent US tariffs. According to their model, these measures are expected to cut Quebec’s annual industrial output by nearly C$2 billion by 2028, with the forecast showing a reduction of about C$1.8 billion compared to a scenario without the new tariffs. This decline would place Quebec’s gross value added approximately 0.3% below the baseline.
President Donald Trump imposed a 50% tariff under Section 338 of the Tariff Act of 1930 on selected Canadian goods. The duties took effect on Aug. 22 after a three-day suspension. They target specific electrical and construction products, jewelry, textiles, cosmetics, wood derivatives, plastics, and alcoholic beverages. These measures apply to covered goods even if they comply with the USMCA trade agreement. Items already subject to some national-security tariffs are not included under Section 338.
According to Oxford Economics, these tariffs encompass roughly 5.5% of Canada’s exports to the United States in 2025. The analysis indicates that the new duties will increase the effective US tariff rate on Canadian exports from 5.1% to 6.9%. The largest contributions to this rise come from plastics, electrical machinery, and wood and paper products. The firm also highlighted that manufacturers in Quebec, New Brunswick, and Ontario face the highest exposure among Canadian provinces due to their specific product mixes.
Tariffs Increase Manufacturing Risks in Quebec
The economic impact on Quebec also stems from the province’s dependence on US demand. Official statistics show Quebec’s merchandise exports to the US reached C$84.8 billion in 2025, accounting for 69.8% of its total merchandise exports. While exports to the US declined by 6.9% from 2024, exports to other countries increased by 10.6%. After a 0.1% decline in the previous quarter, Quebec’s real GDP grew by 0.3% during the first quarter of 2026.
On a national level, Oxford Economics estimates that the combination of new US tariffs and Canada’s planned retaliatory measures will reduce Canadian GDP by 0.3 percentage points in 2027 from the August baseline. The same projection suggests consumer prices will be approximately 0.3 percentage points higher next year. This analysis considers the combined effects of the Section 338 duties and Canada’s counter-measures, but does not interpret the C$1.8 billion figure for Quebec as a government budget loss.
Canada Moves Toward Matching Counter-Tariffs
Starting September 8, the Canadian government plans to impose counter-tariffs on C$27.6 billion worth of US imports. Ottawa will implement rates of 15%, 25%, and 50%, aligning with the tariffs imposed by the US on targeted sectors. The measures will affect industries 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 US tariffs.
The Quebec government has issued updated guidance for local companies regarding US duties and Canadian countermeasures. The province lists the Section 338 tariffs alongside existing US tariffs on steel, aluminum, and related products. These new measures increase costs across a broad range of Quebec exports, with the United States remaining the dominant foreign market for the province. Oxford Economics’ estimate of C$1.8 billion measures the annual industrial output gap through 2028 compared to a scenario without the new tariffs.