Canada walked away from a trade deal that threatened our economic sovereignty. Signing the deal would have made permanent illegal tariffs that would have crippled Canadian industry and gutted our manufacturing base. There was no choice but to fight.
Workers are now rightly wondering what comes next as the full weight of new American tariffs are imposed on $27.6 billion of CUSMA-compliant goods on top of existing duties of 10 per cent to 50 per cent on autos, steel, aluminum, copper, lumber and their derivative products.
Nearly 90,000 additional jobs across Canada are on the line in sectors from agriculture and dairy to electronics, construction and industrial inputs—along with all of the services that support Canadian manufacturing and food production.
The retaliatory tariffs announced on August 25, 2026 will also create their own measure of economic uncertainty and challenge. The counter-tariffs are designed to offer some measure of protection to the same industries hit hard by Section 232 and 338 tariffs by attempting to price American competitors out of the market—but this won’t shield every business.
At the same time, the higher cost of key inputs that can’t easily be sourced in Canada may negatively impact other businesses that are struggling to keep afloat, raising the prospect of additional layoffs.
The solid economic growth Canada posted this spring will almost certainly slow this fall.
What’s on offer
A key question at this point is whether the $7.5 billion support package for workers and businesses, announced by the federal government alongside counter-tariffs, offers sufficient protection to weather the coming storm.
For workers, the package builds on the temporary EI measures introduced last year. This includes extending the suspension of the one-week waiting period for benefits, extending the 20 extra weeks of support for certain “long-tenured workers” by another eight months, and encouraging uptake of a new Workforce Retention and Retraining Program that combines the existing EI Work-Sharing Program and Worker Retention Grant to help employers hang onto skilled staff.
The program’s goal is to support “work-sharing flexibilities” while providing employers with funding of up to $1,000 per participant to help offset training and administrative costs—to better position firms for the future. The maximum duration of the work-sharing program will be expanded to 150 weeks and the requirements for recovery plans relaxed. Workers’ schedules—as few as two working days a week—may be approved.
For businesses, beginning in September, the government will increase funding for the Regional Tariff Response Initiative by $1.5 billion. Delivered through Canada’s Regional Development Agencies, the program is intended to help small- and medium-sized employers (SMEs) respond to tariff pressures, adapt their operations and address liquidity challenges.
There is also a new $500-million liquidity stream, under the Business Development Bank of Canada’s Pivot to Grow program, aimed at helping SMEs manage immediate cash-flow pressures, along with targeted programs for the forestry, steel and aluminum sectors. The minimum revenue threshold to access BDC tariff-related programs will be lowered to from $2 million to $1 million.
There are improved terms for the $10 billion Large Enterprise Tariff Loan facility as well, and a new $2 billion Canada Strong Diversification Fund available to medium-sized companies in tariff-impacted companies with shovel-ready projects.
A counter-tariff exemption framework is expected to be announced shortly to assist businesses that can’t source U.S. inputs domestically or from another country, or where the counter-tariffs might generate severe impacts on selected Canadian industries (as we saw with the walk back of seafood retaliatory tariffs on August 27).
Does the federal package measure up?
As my colleagues, Stuart Trew and Marc Lee, wrote last week, the consequences of the rejected deal would have fundamentally undermined our economic capacity and our political sovereignty, entrenching our status as a vasal state. In rightly rejecting this ruinous course, workers and communities deserve a fulsome response.
While the federal government has moved quickly, the measures on offer only tinker at the margins. The extension of EI programs is important, but very narrow in scope, certainly not equal to the task of protecting Canadians in this moment of crisis.
The COVID-19 pandemic graphically revealed the EI’s sizable gaps—forcing the government to bring in entirely new programs through the Canada Revenue Agency to offset massive earnings loss.
Instead of finally fixing the well-documented problems in the years following, the government settled on doing nothing. It did not address the high eligibility threshold that effectively screens out thousands upon thousands of workers (less than four in 10 unemployed workers access EI benefits today). It did not improve the very low earnings replacement rate (only 55 per cent) or introduce a minimum benefit.
Nor did it improve the provisions for selected “long-term workers” introduced last year and now extended, which exclude the vast majority of unemployed. The new work-sharing programs and funds to assist and retrain displaced workers are useful—but these efforts need to be massively scaled up (there are only 266 work-sharing agreements currently in place!!).
Likewise, the narrow focus on manufacturing is hugely problematic. As the economic impacts reverberate through the economy, many more workers will need sustained support. This is critical if Canada wants to strengthen its domestic market to replace dependence on U.S. trade. We urgently need an EI system for the 21st century, not a series of temporary fixes.
An additional word to the federal government: Stop laying off workers. Pursuing austerity at this moment is a massive own-goal—not only in terms of the state’s capacity to deliver critical public services, but as an economic stabilizer during difficult times.
And what of business?
Small- and medium-sized businesses are also worried about the rescue package weighted towards loans and employers with larger payrolls. Trump’s latest 50 per cent tariff is focused largely on goods manufactured and shipped by smaller firms. Businesses with $1 million in revenues are eligible to apply, but this threshold will still exclude most small businesses, according to business groups.
Other firms will be deterred from taking on more debt—not an appealing prospect for those still digging out from COVID-related debt and facing an uncertain future thanks to tariffs.
The government has signalled that it will respond quickly on remissions and is keen to assist businesses diversify their supply chains and client base. It remains to be seen how this will play out, whether more support will be forthcoming.
The Canada Emergency Wage Subsidy (CEWS) program delivered crucial support to business, accounting for 60 per cent—or $97 billion—of all federal pandemic spending. But it was also poorly targeted: millions of dollars flowed to large or profitable companies that used the cash to boost profits, buy back shares, or pay out executive bonuses and dividends.We can’t forget the lessons of COVID in our urgency to respond to this crisis.
Private profit over public interest
The immediate challenge is to address short-term effects of this assault, but it raises fundamental questions about where we are going: what is the government’s vision not only on the future of CUSMA but the Canadian economy as a whole?
Prime Minister Mark Carney declared at the January 2026 World Economic Forum in Davos that this moment represents “a rupture, not a transition” in the international rules-based order. Yet in Canada, there’s been no shift in the government’s commitment to neoliberalism that has delivered stagnant wages, skyrocketing levels of income inequality and public sector austerity over the past 30+ years.
The federal government will host sovereign wealth funds and large private equity firms around the world next month. In its quest to finance its agenda, public assets like airports, ports, toll roads, power grids, and water systems are rumoured to be on the table. In our efforts to disentangle ourselves from the rapacious grasp of the U.S. government, we seem to be leaping from one frying pan into another.
Confronting American aggression, Hadrian Mertins-Kirkwood argued last year, “cannot be met using the same laissez-faire approaches that got us into this mess. Canada-U.S. integration is, after all, the product of a half-century of free trade, deregulation and privatization. By giving capital free rein, unhindered by borders and emboldened by the erosion of taxation and regulatory regimes, governments have facilitated the concentration of economic power into the hands of multinational corporations with no loyalty to Canada or concern for the public interest.”
As we work toward the next federal budget—with an estimated $7 billion in new tariff revenue in hand—we need a comprehensive plan that takes back control of our economic future not only from an imperialist United States but from financial elites that have no loyalty to Canada or its people.
This starts with prioritizing the needs of workers and communities from the coming storm.
About the author
Katherine Scott
Katherine serves as the director for the CCPA’s gender equality and public policy work. She has worked in the community sector as a researcher, writer and advocate over the past 20 years, writing on a range of issues from social policy to inequality to funding for nonprofits.
