Rod McIntyre, a crane operator at Stelco’s Hamilton Works, was at the plant earlier this week and could feel something was off. Orders were down and one of the lines had dropped a shift.
It made him nervous, especially for his brother, who also works at the steel plant but has much less union seniority, so he might be at risk if things got really bad and Stelco was forced to cut workers.
“I’ve probably never watched the news so much,” he said.
Around the lunchroom, people weren’t talking about the light stuff anymore, nothing about family or hockey or who caught a big fish. It was all Trump talk now, which was jarring, since in his more than two decades at the plant he’d rarely heard anyone veer into something as touchy as politics.
But at this point, you couldn’t really avoid it. The steel and aluminum industries have been singled out by U.S. President Donald Trump, who announced punishing 25 per cent tariffs on their products, which, as of Friday morning, were still slated to go into effect next Wednesday, even while other tariffs have been deferred until April 2.
Whenever Trump talked about bringing manufacturing back to the U.S., McIntyre felt like Trump was talking directly to him, as if he was saying, “I’m coming for your job, and your brother’s job.”
“He didn’t say my name,” McIntyre said. “But that’s what he’s getting at.”
Economists say if Canada enters a full-blown trade war next month, it could be more destructive to the economy than the pandemic as Canadians would face a tariff shock unlike anything seen since the Great Depression. They caution that if Trump’s 25 per cent tariffs return, it would plunge the economy into a recession while pushing inflation up again, resurfacing fears around stagflation.
Businesses that rely heavily on shipping their products to the U.S. — including steel producers, auto manufacturers and lumber mills — could be forced to lay off workers within weeks, or even days.
“My biggest concern is the threat to our producers,” said Doug Porter, chief economist at BMO.
For months, the warnings from experts felt hypothetical. But this week, with the threatened steel tariffs just days away, it looked like all of it was starting to happen.
McIntyre has stopped looking for a new car for his wife, Dianne, even though the transmission on her seven-seater Nissan is starting to act up.
“It’s still going,” he said. “So fingers crossed.”
“I drive it to and from work and then we will drive Rod’s car,” Dianne said. “I just have to be very careful with how I drive it so that I can try to make it last as long as I can.”
Dianne, who works as an educational assistant at a school in Hamilton, said she wouldn’t be able to support the family on her salary alone in a worst-case scenario where her husband loses his job and a major trade war drives up the costs of almost everything.
Dianne and Rod, and their twin 10-year-old boys, didn’t end up booking a trip to Myrtle Beach for March break, in part because they’re pulling back spending, but also because they couldn’t stomach supporting the U.S.
“We were like, OK, let’s prepare,” Rod said. “Let’s not be too lavish, and just watch.”
Just how bad things could get depends on when tariffs are implemented, how many products they apply to and how long they stay in place. Trump has already threatened, applied, then paused across-the-board tariffs, while making exceptions for the automotive industry and potash, causing widespread confusion, frustration and distrust.
“People are more pissed off than being panicked,” said Ron Wells, president of United Steelworkers Local 1005, who represents Stelco workers in Hamilton. “He keeps changing his mind. They’re off, they’re on, they’re off.”
Wells said he was hopeful the Hamilton plant could get through any trade war without layoffs. The Canadian operation was attractive to Stelco’s U.S. parent company, Cleveland-Cliffs, he said, since the loonie is low and Canadian workers don’t need the same health benefits as their American counterparts.
Even if Trump postpones the tariffs yet again or we negotiate exemptions for certain industries, “any remaining tariff will still weigh on (economic) growth and leave us with lingering uncertainty,” said BMO’s Porter.
If across-the-board tariffs come into force in April and last longer than a year, RBC economists expect zero economic growth in 2025, while the Canadian unemployment rate would peak at more than eight per cent, according to a recent analysis. (It’s currently 6.6 per cent.)
Ontario alone could shed an estimated 70,000 jobs if the trade war lasts a full year, with the auto and manufacturing sectors feeling the brunt of the pain, BMO economist Robert Kavcic told the Star.
If the tariffs are short-lived, the economy would still suffer, as businesses and consumers will remain cautious about spending, afraid that an unpredictable Trump could slam them again, experts say.
Even if the trade war lasts just three months, the unemployment rate would peak at more than seven per cent over the second half of 2025, RBC predicts.
RBC’s economic forecasts don’t include possible fiscal stimulus from the government, which would alleviate the struggle.
As the economy shrinks, retaliatory tariffs would weigh on Canadians’ pocketbooks by making imported American goods more expensive, as roughly 13 per cent of Canada’s Consumer Price Index basket is made up of U.S. imports, according to the Bank of Canada.
Some of the cost increases would be felt immediately, given how intertwined both countries’ economies are, said Pedro Antunes, chief economist at the Conference Board of Canada.
“The first thing that comes to mind is produce,” said Antunes, adding that it’s hard to find affordable substitutes for some fruits or vegetables coming from the U.S.
And the recent depreciation of the loonie against the U.S. dollar has already been adding to the cost of Canadians doing business with the States and travelling south of the border.
The Bank of Canada warned that, in a scenario where tariffs are permanent, overall inflation would rise above its two per cent target, but the timing of that would depend on how quickly Canadian businesses pass through higher costs to consumers.
In the central bank’s scenario, which is based on the executive order signed by Trump on Feb. 1 and Canada’s retaliation plan, inflation would rise and stay above target for another three to four years before falling again.
The combination of a slow economy and high inflation makes even the future of interest rates uncertain as central bankers weigh the need to control inflation versus support economic growth.
When Rod and Dianne McIntyre throw parties, there are steelworkers all over the place. Her father was a steelworker, Rod’s father too, and Rod’s brother, and some of his closest friends.
Rod started working in the industry three decades ago when he was 19. At the time, getting a steel job was the standard move for anybody in Hamilton who didn’t want to get trapped in endless commutes, stuck on the QEW, going back and forth to an office job in Toronto.
“It’s a good living here,” Rod said.
But with the new American posture on trade, and Trump demanding all manufacturing move inside his country, there’s creeping worry about how long manufacturers in Canada could withstand an assault like that before being forced to shut down or relocate.
“If you don’t make your product in America … under the Trump administration, you will pay a tariff, and in some cases, a rather large one,” Trump said in a speech before U.S. Congress last week, after touting the auto sector in America is about to boom.
Dianne hears the anxiety in her husband. At home, he’s on the phone a lot more than he used to be, talking to friends about whatever development just exploded into the news. She hears him saying things like, “This isn’t good,” and “It’s concerning.”
If she were to look around her house during one of those parties, Dianne said, she starts picturing faces and counting, realizing just how many people she knows, across several generations, who have earned a living and raised kids on pay cheques from a Canadian manufacturing sector that’s suddenly under attack.
“Some of those people have their children that work there and want their children to work there,” she said. “What if that is something that couldn’t be anymore?”
