With Canada still under threat of the largest trade shock since the Great Depression, many workers might be worried about losing their jobs — even after Justin Trudeau announced a last-minute reprieve from U.S. President Donald Trump’s tariff threats.
While no Canadian industry is completely immune to layoffs during an economic slowdown, the sectors that rely most on U.S. trade would be expected to be hit first and hardest if the two nations can’t find an agreement over the next month, economists say.
Overall, Trump’s punitive tariffs — which were threatened to begin Tuesday before Trudeau and Trump agreed on a pause of at least 30 days after a Monday phone call — would hurt demand for Canadian goods and could push national unemployment rates up two to three percentage points from the current 6.7 per cent, according to RBC Economics. That’s significantly higher than the six per cent that many economists consider to be “normal” for the Canadian economy.
Jobs in the manufacturing sector, including the making of motor vehicles, aerospace parts and primary metals, are the most vulnerable to U.S. tariffs, says RBC economist Nathan Janzen.
The automobile sector is “a poster child” for Canada’s integration with the U.S., he said. Blanket tariffs will, in many cases, end up “taxing the same product multiple times, effectively, as it crosses the border at multiple stages of production.”
Canada’s top 15 industries by trade with the U.S., most of which are manufacturing based, account for nearly 3.1 per cent of the Canadian workforce, according to RBC.
Meanwhile, workers in agriculture or raw commodities such as oil are not in as much danger, said Janzen, explaining that demand can be sustained by finding alternative markets for those exports. Trump also announced a lower tariff of 10 per cent on Canadian energy products as the U.S. lacks substitutes.
Hospitality and retail workers are relatively safe. So are workers in professional services like banking. These jobs could be at risk later on if the trade war escalates.
“Those are industries that aren’t necessarily immediately impacted by the tariffs but, over time, if you have a significant shock to the goods-producing side of the economy, to the manufacturing sector, that results ultimately in layoffs,” said Janzen.
“If you’re in a world where you’re having to structurally disentangle U.S. and Canadian supply chains, that’s still a pretty significant cost that can’t be avoided over the longer run,” he added.
On Saturday, the Department of Finance Canada said it would be proactively assessing the impacts of U.S. tariffs across economic sectors and boosting support as needed. “This includes financing and advisory supports for businesses through financial Crown corporations and supports for workers through the Employment Insurance program,” according to a press release. Finance Minister Dominic LeBlanc also said the government might consider deferring tax payments for Canadian businesses.
“The first goal is to keep Canadians working,” said Lana Payne, president of Unifor, Canada’s largest private sector union representing around 22,000 workers in auto assembly and powertrain operations. “And if we get into a situation where that can’t happen, then we have to make sure that the safety net is as robust as possible. Currently, it is not.”
“I know that government is working on a suite of items to support workers in the event of layoffs. But I will also say that usually when governments work on things, they’re never quite as robust as we need them to be,” Payne said.
Unifor has been urging the government to introduce wage subsidies targeting trade-dependent sectors as well as make loans available to keep businesses running, she added.
“There’s a lot of force that will be brought to bear in terms of how we get the (auto) sector back up and running.”
