QUEBEC / RankWire.AI / – According to fresh modeling from Oxford Economics, Quebec is expected to experience the largest provincial economic impact resulting from a new round of U.S. tariffs. The firm projects that these measures will decrease Quebec’s annual industrial output by nearly C$2 billion by 2028, with an estimated loss of about C$1.8 billion compared to a baseline scenario without the new duties. This would result in Quebec’s gross value added being approximately 0.3% below that baseline.
President Donald Trump enacted 50% tariffs under Section 338 of the Tariff Act of 1930 on specific Canadian goods. These duties became effective on Aug. 22 after a three-day suspension. The tariffs apply to certain electrical and construction products, jewelry, textiles, cosmetics, wood derivatives, plastics, and alcoholic beverages. Even when products comply with the USMCA trade agreement, the duties are applicable. Items already subject to some national-security tariffs are excluded from Section 338 coverage.
Oxford Economics indicates that the new U.S. tariffs impact approximately 5.5% of Canada’s exports to the U.S. in 2025. They estimate that these measures increase the effective U.S. tariff rate on Canadian exports from 5.1% to 6.9%. The primary contributors to this increase are plastics, electrical machinery, and wood and paper products. The analysis highlights that manufacturers in Quebec, New Brunswick, and Ontario face the greatest exposure among Canadian provinces due to their specific product mix.
Tariffs heighten manufacturing vulnerability in Quebec
The economic impact on Quebec also stems from its dependence on U.S. demand. Official Quebec statistics reveal merchandise exports to the U.S. totaled C$84.8 billion in 2025, representing 69.8% of Quebec’s total merchandise exports abroad. While exports to the U.S. declined by 6.9% from 2024, exports to other countries increased by 10.6%. In the first quarter of 2026, Quebec’s real GDP grew by 0.3%, following a 0.1% decrease in the previous quarter.
At the national level, Oxford Economics estimates that the new U.S. tariffs combined with Canada’s planned retaliation will reduce Canadian GDP by 0.3 percentage points in 2027 from its August baseline. The same analysis predicts consumer prices will be roughly 0.3 percentage points higher next year. This assessment considers the combined effects of Section 338 duties and Canada’s countermeasures, without framing the C$1.8 billion figure for Quebec as a government budget loss.
Canada plans to implement counter-tariffs in response
Starting Sept. 8, the Government of Canada intends to impose counter-tariffs on C$27.6 billion worth of U.S. imports. Tariff rates of 15%, 25%, and 50% will be applied, matching the existing U.S. rates on targeted products. The measures will affect sectors including steel, dairy, appliances, agricultural equipment, pulp and paper, plastics, and electronics. Additionally, Canada announced C$7.5 billion in new and increased support for workers and businesses impacted by U.S. tariffs.
Updated guidance from Quebec’s government informs companies about the U.S. duties and Canadian countermeasures. It 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, with the United States continuing as the province’s primary foreign market. Oxford Economics’ estimate of C$1.8 billion captures the annual industrial output gap expected by 2028 relative to a scenario without the new tariffs.