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Tariff troubles create devastating consequences for employers and job seekers alike
Editorial by Christian Saint Cyr
National Director / Canadian Job Development Network
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Between the social media posts and the on-again, off-again announcements, you may be wondering where we're at with United States tariffs and Canadian countermeasures.
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While there was a lot of rhetoric about tariffs out of the U.S. administration in January, with proposed implementation on February 4th, this was postponed until March 5th when the United States imposed tariffs of 25 per cent on Canadian exports, and 10 per cent on energy products from Canada.
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Canada responded by imposing tariffs on $30 billion in goods imported from the U.S. including products such as orange juice, peanut butter, wine, spirits, beer, coffee, appliances, apparel, footwear, motorcycles, cosmetics, and certain paper products.
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A week later, the U.S. imposed tariffs of 25 per cent on Canadian steel and aluminum products. Canada responded with 25 per cent reciprocal tariffs on a list of products totaling $29.8 billion, including: $12.6 billion in steel products; $3 billion in aluminum products; and $14.2 billion in additional imported U.S. goods (including tools, computers and servers, display monitors, sports equipment, and cast-iron products).
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Then, after the United States imposed unilateral tariffs on most penguin and non-penguin inhabited countries around the world, Canada was mostly untouched except for a lethal 25 per cent tariff on Canadian automobiles. Canada responded by imposing 25 per cent tariffs on non-CUSMA (Canada-United States-Mexico Agreement) compliant vehicles imported into Canada from the United States, and 25 per cent tariffs on non-Canadian and non-Mexican content of CUSMA compliant vehicles imported into Canada from the United States.
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Most recently, the United States confirmed they will be 'soften the impact of auto tariffs' to give a 'little relief' to the industry. The levies, aimed at forcing automakers to reshore manufacturing domestically, had threatened to scramble a North American automotive production network integrated across the U.S., Canada and Mexico.
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You may be wondering, how can the U.S. administration apply these tariffs when we have the CUSMA deal. Only about 38% of U.S. imports from Canada were traded under CUSMA provisions in 2024. Analysts believe this low percentage was largely due to the administrative burden of meeting its rules of origin requirements when a large share of U.S. general tariff rates were already zero outside of the North American free trade agreement. At present, it's the CUSMA agreement that is the saving grace for many automobiles and automotive parts governed under CUSMA.
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Meanwhile, Canadian softwood lumber producers could see more disruptions since the U.S. Commerce Department has proposed raising the average combined duty rate—including both anti-dumping and countervailing duties—with a final decision on the new rate expected in August.
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Unfortunately, we can't be too reliant on CUSMA as the first joint review of the Canada-United States-Mexico Agreement (CUSMA) is scheduled for June 30, 2026, six years after its entry into force. This review will determine whether the three parties will extend the agreement for another 16 years.
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Oh, did I forget to mention the United States isn't the only country we have retaliatory trade disputes with. Last October, Canada imposed a 100% surtax on Chinese EVs. In March 2025, China announced it was imposing retaliatory tariffs on over US$2.6 billion of Canadian agriculture and food products, which took effect on March 20, 2025 and is already having devastating impacts on Canadian farmers and the aquaculture sector.
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So here we are, barely 100 days in and while we're waiting for these issues to resolve them at any moment we can experience more upheaval due to a midnight tweet or impromptu comment.
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These rapid changes are expected to impact some populations more than others. According to a recent article in Money Sense, young Canadians might not be able to pursue the careers they've trained for if the sectors tied to U.S. exports—like manufacturing or certain high-tech fields—get hit. In that case, many may be forced to pivot toward industries focused on Canadian or alternative export markets, like Europe, though that kind of shift won’t happen overnight. This coupled with an escalating cost of living could impact Gen Z for decades.
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What is the impact for local employers and how will this impact future hiring? According to the Canadian Federation of Independent Business, 4 in 5 businesses have seen changes resulting from the U.S.-Canada trade war. Key changes include higher costs, weaker Canadian dollar, pricing challenges, reduced profits, and lower demand.
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According to a recent poll conducted by the CFIB, changes experienced by small businesses due to the U.S.-Canada trade war include:
- Increased costs for goods/supplies (51%)
- Impact of a weakened Canadian dollar (e.g., higher import costs, pricing challenges) (39%)
- Increased difficulty pricing products/services competitively (37%)
- Reduced profits (35%)
- Lower customer demand (35%)
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All of these impacts weaken the finances of local employers, reducing their ability to effectively staff their organizations.
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Real impacts don't displace the top worries employers fear about the U.S.-Canada trade war including:
- Economic uncertainty (e.g., potential recession, inflation) (82%)
- Increased operational costs (63%)
- Difficulty in pricing products/services competitively (56%)
- Currency exchange rate volatility (44%)
- Business cash flow challenges (e.g., paying rent, meeting payroll, paying suppliers/mortgage, getting paid) (42%)
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Having now completed the federal election, with Mark Carney as Canada's new Prime Minister, employers are looking to not only the federal government but provincial governments as well to help cultivate inter-provincial trade and labour mobility; provide financial support to impacted businesses; and to address U.S. tariffs with the intention of eventually restoring our trade balance.
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Tariffs have already hit many small businesses hard. The CFIB is urging governments to:
- Ensure any counter tariffs do not have a broad impact on Canadian SMEs.
- Focus business supports on the needs of small businesses – not just large exporters.
- Quickly reinject any money collected through counter tariffs back into the economy.
- Reduce taxes and red tape to make sure Canadian small businesses are better equipped to stay competitive with their American and global counterparts.
- Implement a “mutual recognition” agreement to bring down interprovincial trade barriers.
- Provide support for businesses experiencing challenges in pivoting their operations (e.g., help with shipping costs, rules of origin compliance, and logistics).
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While our current trade war has been started by impetuous, self-centered decision making, it was somehow inevitable. Free trade, a strategy pursued worldwide since the end of World War II has produced immeasurable worldwide benefits and created the clockwork economy that has stimulated most recently 15 years of continuous economic growth.
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And even though this has all been accelerated by an impetuous man-child who's been throwing rocks into the delicate clockwork machinery of the economy just to see what would happen, we're proceeding down, shall we say a precedented path?
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The U.S. Smoot-Hawley Tariff Act of 1930, which raised tariffs on imports by around 20% with the intention of stimulating U.S. manufacturing, had significant negative impacts on the global economy during the Great Depression. It contributed to a global trade war, leading to a sharp decline in international trade and worsening the depression's effects.
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Now generally, I try to utilize the Job Development Pulse as an opportunity to provide a positive take on a job development issue, but I believe any attempt to do so here would be like putting bronzer on a pig.
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This trade war is going to have a generational impact on the labour market. Things are likely to get a lot worse before they get better, but I believe there are two messages job seekers and employers can take away to significantly improve their prospects.
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Employers need to do an inventory of the economic impacts of the increased cost of international tariffs. It's easy to look at manufacturing or agriculture and see direct impacts but there are industries that will be impacted in a secondary-fashion.
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For instance, China has announced they will be limiting the distribution of American films and other entertainment within their country. This will have an impact on Canadian companies contributing to the development and distribution of western films, music and video games.
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An economic squeeze will also disproportionately impact businesses that rely on discretionary income. Businesses relying on travel, luxury goods and entertainment will be disproportionately impacted in comparison to those selling consumer goods and services such as groceries, education, transportation and health care. Even these sectors will be impacted as consumers make decisions based on rising costs and limited income.
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In conducting an inventory, businesses will need to focus on sectors that are sustainable in a downturn economy. They will likely look for opportunities to automate their functions, utilize A.I., contract-out work and limit salaries and other business costs.
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The key takeaway for job seekers in this economic climate is to focus on skills development. Certainly, one-, two- and four-year training programs with a strong vocational outcome will be ideal. This would include most Red Seal apprenticeships, but also occupationally specific programs such as nursing, engineering, teaching, pharmacy and training programs leading to a certified occupation as a technician or technologist.
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While a longer training program is not going to be ideal or available to many job seekers, I cannot stress enough the importance of skills development whether in the form of certificates, diplomas or micro-credentials.
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It's critical in our job development role, to be actively engaged in conversations with local businesses about the challenges they are facing in this economy, how their businesses are changing and what decisions they are making in the best interests of their enterprise. If an employer is contracting-out, we can seek pathways to self-employment. If the employer is introducing a new point-of-payment system, can we provide training in this area? We need employer-informed answers.
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For several years, I've been telling my kids that Covid was likely to be the seminal event in their lives, similar to wars, economic strife and technological transformation. As I watch all of this unfold, it occurs to me the long-term implications of this trade war could easily eclipse the long-term impact of Covid.
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Savvy job seekers, focused on understanding these changes, developing new skills and speaking to the changing needs of employers will be best prepared for these changes. Those competing for an every-decreasing selection of entry level jobs will increasingly struggle in the years to come. Job search is going to require proactivity and job seekers need to embrace this.
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We’ll be discussing the ongoing and potential implications of global tariffs at our #MotivatingMondays meeting of the Canadian Job Development Network, Monday May 5th at 8:30am Pacific; 9:30am Mountain; 10:30am Central; 11:30am Eastern; 12:30pm Atlantic and at 1pm in Newfoundland.
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On the morning of Monday May 5th 'Click this Link' to join the session LIVE.
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