Tariffs war: Up to 1 million Canadians could lose their job, says expert

'Recession all but inevitable': chief economist

Tariffs war: Up to 1 million Canadians could lose their job, says expert

Despite US President Donald Trump putting a temporary halt to impose tariffs on Canadian goods entering this country, the trade war he has put into motion has already caused substantial long-term damage, according to one expert.

“Part of the method to his madness has been to put the fear of erratic, unpredictable action into all global investors, and reinforce that you want to be behind that wall, rather than on the other side of it,” says Jim Stanford, chief economist at the Centre for Future Work, in a Toronto Star report.

“The risk that companies now face – knowing that Trump will do this again – is substantial. And this is where Canada faces an emergency, even if the tariffs don’t last for long. We’ve never had a trade shock outside of wartime like this since the Great Depression. So, we are in uncharted territory.”

As far back as November 2024, various groups already called on the Canadian federal government to take decisive action following Trump’s threat of imposing 25 per cent tariffs on Canada.

Trump’s decision to put a halt on the tariffs came after Prime Minister Justin Trudeau agreed to reinforce his country's border with the US to clamp down on migration and the flow of the deadly drug fentanyl, according to a BBC report. However, the temporary reprieve will only last for 30 days.

“He doesn’t have to actually implement these tariffs to cause damage,” says Antunes. “He just has to threaten to do it. And it’s already working.” 

Canadian businesses south of the border

With the threat, “many businesses will increase production on the other side of the border to avoid tariffs,” said Douglas Porter, chief economist at BMO, in the same Toronto Star report.

“The uncertainty alone about further protectionism could put a chill on business investment for years,” he said, adding that “a modest recession” is a realistic possibility if the tariffs last a year.

Despite the threat, a majority of CEOs do not believe Trump’s tariffs threat will materialize, according to a previous report from the Chief Executive Group.

However, prior to Feb. 4 – when the US tariffs were set to kick in – almost two-thirds (65%) of Canadian employers took pre-emptive action, preparing for potential tariffs by shipping goods or products to the U.S. before Trump’s inauguration, according to a previous KPMG survey.

Nearly half (48%) also plan to shift their investments to the U.S. and set up operations or production south of the 49th parallel to serve the U.S. market and reduce costs.

1 million Canadians could lose their job: expert

Should the tariffs be imposed and last for a considerable amount of time, far too many Canadians could lose employment, said Stanford.

“A million might even be conservative,” he said, adding that the job losses will not be limited to manufacturing and export industries. 

“All of our tradable industries depend on the U.S. market, first and foremost… The job losses in direct export industries will have repercussions for everything from coffee shops to dry cleaners to homebuilders, even to the public sector, through taxes that are lost,” Stanford said.

These all mean that recession is “all but inevitable,” he said, according to the Toronto Star.

“This is how recessions start. There’s a shock, in some strategically important part of the economy, and then that shock ripples through the rest of the economy,” said Stanford.

Over eight in 10 (81 per cent) Canadian employers are willing to endure the short-term pain of retaliatory tariffs if Canada can negotiate a fair deal that protects the country’s trade-based economy, independence and sovereignty, according to the KPMG report.

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