Jobs, Jobs, Jobs: How Tariffs Are Disrupting Canada’s Labour Market

A month after sweeping tariffs were announced, there continues to be uncertainty about the effects they’ll have in the long run. But tariffs are already having an impact on our job market.

According to Statistics Canada’s latest jobs report, Canada added a net 7,400 jobs in April, but lost 31,000 jobs in manufacturing and 27,000 in wholesale and retail trade. At the same time, the unemployment rate creeped up from 6.7% to 6.9%.

What Do Tariffs Have to Do with Canadian Jobs?

The US is currently Canada’s biggest trading partner. With tariffs raising the cost of Canadian goods for American consumers, many Canadian companies will see a drop in sales. For example, two thirds of Canada’s auto revenues come from exports to the US. As sales decline, auto manufacturers will have to cut costs elsewhere, which often involves slowing production and cutting jobs.

Canada’s retaliatory tariffs are also making imports of US goods to Canada more expensive. This is driving up the cost of building materials, which is having a big impact on housing construction. Between higher materials costs and weaker housing demand from lower immigration, builders are reluctant to start new construction projects. That means fewer jobs in housing construction.

Government Response

Significant parts of the Canadian economy are being impacted by the ongoing trade war. A prolonged battle may lead to a recession in Canada this year. But the federal and provincial governments are taking steps to mitigate those impacts. 

For example, the federal government has passed temporary adjustments to Employment Insurance to help Canadians whose jobs are affected. There are also efforts underway to remove interprovincial trade barriers and grow international trade with other countries to open new markets and reduce Canada’s reliance on exports to the US.

Bottom Line

Canada's labour market is facing significant challenges that are affecting various industries and pushing the unemployment rate higher.

The tariffs imposed by the US will have major impacts on Canadian consumers. Most importantly, they will lead to higher prices on both Canadian and US goods and job losses in affected sectors.

But while the situation remains uncertain, Canadians are showing a shared desire to build resilience.

For in-depth analysis of the April jobs report External link., check out the Desjardins Economic Studies External link. page of our website.