Prime minister warns of tough times ahead as Canada pivots from U.S market; U.S. hints at additional measures
Canada's retaliatory tariffs on nearly $28 billion worth of U.S. goods took effect at 12:01 a.m. Eastern Time on Tuesday, marking a significant escalation in the ongoing trade dispute between Ottawa and Washington – and confronting HR professionals across the country with accelerating workforce planning uncertainty.
The counter-tariffs, ranging from 15 per cent to 50 per cent, apply to nearly $28 billion worth of U.S. imports, matching the duties Washington imposed on Canadian goods including machinery, textiles and consumer products. The products subjected to duties include dairy, agricultural equipment, paper, household appliances and electronics, with U.S. steel and aluminum products now subject to a doubled rate of 50 per cent.
In a recorded national address released Tuesday morning, Prime Minister Mark Carney said that Canada's strategic pivot away from the U.S. market would carry a tangible price – but that accepting the status quo would be costlier still. Carney warned Canadians that the country's pivot away from the United States would come at a cost, but that the alternative would be far worse, reported the Canadian Press.
“In the spring of last year, I warned that America is trying to break us so they can own us. And I promised that that will never, ever happen,” Carney said in the video. He also maintained that the U.S. wanted to restrict Canada’s trade with other countries and its protection of French language and culture.
A workforce absorbing a direct hit
The human cost of the Canada–U.S. trade war is already registering on labour market dashboards before the full weight of September's tariffs has been felt. Canada shed 42,000 jobs in August, according to Statistics Canada — the final employment report before the full force of 50 per cent tariffs from the U.S. hit the Canadian economy. Royce Mendes, head of macro strategy at Desjardins in Montreal, said the situation could deteriorate further, warning that "the rise in trade tensions between Canada and the U.S. has opened up the possibility of another wave of layoffs in trade-exposed sectors."
The new U.S. tariffs could cost about 87,000 jobs in Canada, with 52,000 directly affected and 35,000 indirectly, according to Trevor Tombe, an economics professor at the University of Calgary in Calgary, Alberta, who published his analysis on The Hub. The hardest-hit provinces for job losses are Ontario, with an estimated 36,100 positions at risk, Quebec with 18,300, and British Columbia with 11,200. The industries set to have the highest number of job losses are machinery, electronics, plastics, and rubber.
For HR leaders already managing workforce risk across heavily tariffed Canadian industries the tariffs escalation sharpens an already difficult landscape. Ontario and Quebec — with effective tariff rates on exports to the U.S. reaching eight and 10 per cent, respectively, due to their concentration in autos and metals — face the steepest regional exposure, according to analysis by RBC Economics.
What the $7.5-billion support package means for HR
On August 25, the Canadian federal government announced a $7.5 billion package of new and enhanced measures to support workers and businesses impacted by the latest round of U.S. tariffs, building on nearly $25 billion in supports rolled out over the past 18 months. For people managers, the most operationally significant component is the new Workforce Retention and Retraining Program (WRRP).
The Workforce Retention and Retraining Program consolidates the existing Employment Insurance (EI) Work-Sharing program and the Worker Retention Grant into a single, streamlined mechanism, allowing employers experiencing a decline in business activity attributable to tariffs to reduce employee hours rather than resorting to layoffs, with affected employees receiving EI benefits for hours not worked. Extended Employment Insurance measures also allow laid-off or separated employees to access benefits sooner and alongside severance payments.
HR leaders understanding which sectors face the steepest job loss exposure will be better positioned to advise leadership on when and how to activate these programs before restructuring decisions are made rather than after.
The practical agenda for people leaders over the coming weeks involves three connected priorities: assessing eligibility for the Workforce Retention and Retraining Program before initiating any layoff consultations; identifying workers for skills transition funding through the Canada Strong Diversification Fund; and building internal communications frameworks that address workforce uncertainty before it accelerates voluntary attrition. The Canada Strong Diversification Fund is being administered through the Strategic Response Fund, helping firms adapt and thrive in the face of trade disruptions.
U.S. Trade Representative Jamieson Greer told media Tuesday morning that the U.S. will consider imposing additional retaliatory tariffs on Canadian goods.
