QUEBEC / RankWire.AI / – The economic impact on Quebec is expected to be the most significant among provinces, with new U.S. tariffs projected to cut nearly C$2 billion from its annual industrial output by 2028, according to Oxford Economics. The firm’s forecast indicates a decrease of approximately C$1.8 billion compared to a scenario without the new duties. Consequently, Quebec’s gross value added would be roughly 0.3% below that baseline.
President Donald Trump imposed tariffs of 50% under Section 338 of the Tariff Act of 1930 on certain Canadian goods. These duties came into effect on Aug. 22 after a three-day suspension, targeting specific electrical and construction products, jewelry, textiles, cosmetics, wood derivatives, plastics, and alcoholic beverages. These measures apply to the covered goods even if they comply with the USMCA trade agreement. Items already under some national-security tariffs are excluded from Section 338 coverage.
Oxford Economics estimates that approximately 5.5% of Canada’s exports to the United States in 2025 will be affected by these new tariffs. The analysis suggests that the effective U.S. tariff rate on Canadian exports will rise from 5.1% to 6.9%, with plastics, electrical machinery, and wood and paper products being the primary contributors to this increase. The firm highlights that manufacturers in Quebec, New Brunswick, and Ontario face the highest exposure among Canadian provinces, owing to the particular product mix involved.
Tariffs Increase Manufacturing Risks for Quebec
The economic impact on Quebec is also driven by its dependence on U.S. demand. Official 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. Export figures to the U.S. declined by 6.9% from 2024, while exports to other nations increased by 10.6%. After experiencing 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 projects that the new U.S. tariffs, along with Canada’s planned retaliatory measures, will reduce Canadian GDP by 0.3 percentage points in 2027 relative to its August baseline. The same analysis estimates consumer prices will increase by roughly 0.3 percentage points next year. The forecast incorporates the combined effects of the Section 338 duties and Canada’s countermeasures, but does not describe the C$1.8 billion figure for Quebec as a government budget loss.
Canada is Preparing to Implement Counter-Tariffs
Starting Sept. 8, the Government of Canada plans to impose counter-tariffs on C$27.6 billion worth of U.S. imports. These will include rates of 15%, 25%, and 50%, aligning with U.S. tariffs on targeted products. The affected sectors include steel, dairy, appliances, agricultural equipment, pulp and paper, plastics, and electronics. Additionally, Canada announced C$7.5 billion in new and enhanced support measures aimed at workers and businesses impacted by the tariffs.
Updated guidance from Quebec’s government advises companies about the U.S. duties and Canadian countermeasures. The province lists the Section 338 tariffs alongside existing U.S. tariffs on steel, aluminum, and related products. These latest measures increase costs across numerous Quebec exports, with the United States remaining the province’s primary foreign market. Oxford Economics’ estimate of a C$1.8 billion annual industrial output gap by 2028 is based on a baseline scenario without the new tariffs.