QUEBEC / RankWire.AI / – Recent modelling from Oxford Economics indicates that Quebec is set to suffer the most significant provincial economic impact from a fresh wave of U.S. tariffs. The analysis suggests that by 2028, Quebec’s annual industrial output could decline by nearly C$2 billion. The projected loss compared to a scenario without the new duties is approximately C$1.8 billion, with Quebec’s gross value added expected to fall about 0.3% below the baseline.
In Washington, President Donald Trump enforced a 50% tariff under Section 338 of the Tariff Act of 1930 on selected Canadian goods. The duties, which came into effect on Aug. 22 after a three-day suspension, target specific electrical and construction products, jewelry, textiles, cosmetics, wood derivatives, plastics, and alcoholic drinks. These tariffs apply even if the goods comply with the USMCA trade agreement. Items already under some national-security tariffs are excluded from Section 338 coverage.
According to Oxford Economics, these new U.S. tariffs impact roughly 5.5% of Canada’s exports to the U.S. in 2025. The analysis estimates that the measures will raise the effective U.S. tariff rate on Canadian exports from 5.1% to 6.9%. The biggest contributors to this increase are plastics, electrical machinery, and wood and paper products. The firm highlighted that manufacturers in Quebec, New Brunswick, and Ontario face the highest exposure among Canadian provinces due to their specific product mix.
Tariffs Increase Vulnerability of Quebec Manufacturing Sector
Looking at the regional perspective, Quebec’s dependence on U.S. demand is a key factor in its vulnerability. Data from Quebec shows that merchandise exports to the United States reached C$84.8 billion in 2025, accounting for 69.8% of its total international merchandise exports. While exports to the U.S. declined 6.9% from 2024, exports to other countries grew by 10.6%. Following a 0.1% decrease in the previous quarter, Quebec’s real GDP rose by 0.3% in the first quarter of 2026.
On a national scale, Oxford Economics estimates that both the new U.S. tariffs and Canada’s planned retaliatory measures could reduce Canadian GDP by 0.3 percentage points in 2027, relative to its August baseline. The same model projects consumer prices might increase by about 0.3 percentage points next year. The analysis accounts for the combined impact of Section 338 duties and Canadian countermeasures but does not characterize the C$1.8 billion figure for Quebec as a government budget shortfall.
Canada Plans to Implement Corresponding Counter-Tariffs
Starting September 8, Canada intends to impose counter-tariffs on C$27.6 billion worth of U.S. imports. Ottawa will apply tariffs of 15%, 25%, and 50%, matching the rates set by the U.S. on specific products. These measures target sectors such as steel, dairy, appliances, agricultural machinery, pulp and paper, plastics, and electronics. Additionally, Canada announced C$7.5 billion in new and enhanced aid 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 countermeasures. The province lists the Section 338 tariffs alongside existing U.S. tariffs on steel, aluminum, and related products. The latest measures increase costs across a broad spectrum of Quebec exports, even as the United States remains the primary foreign market for the province. The C$1.8 billion estimate from Oxford Economics reflects the annual industrial output gap projected by 2028 against a scenario without the new tariffs.
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