On February 10, U.S. President Donald Trump announced 25 per cent tariffs on steel and aluminum imports, including from Canada. This comes despite the 30 day pause on the imposition of generalized tariffs on Canadian and Mexican imports previously announced on February 3. Automobiles, pharmaceuticals and computer chips appear to be next on the hit list.
This is part of an illegal and unjustified campaign of economic warfare against Canada following the inauguration of the new president in January. The slew of executive orders has effectively killed the legal framework around free trade in North America.
Whether these tariffs are a negotiation tactic or the first step in a broader annexation plan, they are already sewing fear among Canadian workers and households who are already under intense cost-of-living pressures. Those with the fewest resources are standing on a precipice.
The Canadian economy has been struggling for the past year. The imposition of broad tariffs will most certainly tip the economy into recession, potentially reducing GDP by an estimated 3.4 and 4.2 percentage points and pushing up unemployment rates. Retaliatory tariffs on imports will also drive up inflation for consumers and businesses in the short term, creating greater drag on the economy and impoverishing households and communities.
The tariff-shock roller coaster
For workers and their families, the threat of tariffs isn’t just rhetoric. Companies are already considering lay-offs and signalling their intentions to relocate factories to the United States. In communities like Windsor, there’s a visceral feeling of betrayal.
Unlike the economic upheaval associated with the COVID-19 pandemic, where millions of low wage services workers were laid off or faced reduced hours, the American juggernaut is aimed at Canada’s export sector and its related businesses.
If the full slate of US tariffs come into effect, Canada’s manufacturing and resource sectors will take the initial hit over the next year, here including Canadian oil and gas producers, and manufacturers of primary metals, plastics, motor vehicles, and aerospace products, as well as professional services, wholesalers, transportation firms and financial institutions.
Together, industries involved in exports to the US account for nearly 17.8 per cent of Canada’s GDP and an estimated 2.4 million jobs, representing 12 per cent of Canada’s total workforce. Oil and gas exports to the US is the largest contributor to GDP—roughly one third of the value of all exports to the US—but manufacturing, professional, scientific and technical services and transportation and warehousing are the largest employers.
A widening circle of workers and communities will be caught up in a potential recession
Canada’s manufacturing sector, which accounts for 70 per cent of total trade with the U.S., is particularly vulnerable to tariffs. The manufacturing sector has been on a downward trajectory in terms of its share of GDP, employment and wages over the last 20-plus years. The loss of well-paid jobs has had a particularly large and adverse impact on the wages and full-time, full-year employment rates of men. As Meg Gingrich and Mark Rowlinson succinctly summarize: “the era of globalization and liberalized trade regimes has not been kind to Canadian manufacturing.”
Today, companies that navigated the pandemic now face an existential threat. With the exception of food manufacturing and machinery manufacturing, the sectors that will absorb immediate job losses have not fully recovered from pandemic-era employment losses. Petroleum and coal product manufacturing, paper and pulp manufacturing, and primary metal manufacturing (including iron, steel and aluminum) have had a particularly challenging time.
Forecasted job cuts in tariff-exposed sectors of the economy will fall initially on men, who continue to represent the largest share of workers in these sectors. For instance, men make up more than three-quarters (76.5 per cent) of workers employed in oil and gas and 71.2 per cent in manufacturing.
This varies of course—42 per cent of the workforce in food manufacturing are women, as are about half in the production of pharmaceuticals. But by and large, the first cuts will fall on male workers in historically well-paid export industries.
Large numbers of racialized workers will be impacted as well. In 2021, racialized workers made up a quarter (25.8 per cent) of the total workforce. A disproportionately large share of those workers are in manufacturing (28.1 per cent), notably in pharmaceuticals (46.5 per cent), motor vehicle parts manufacturing (41.4 per cent), food manufacturing (37.8 per cent) and plastics (35.8 per cent). This includes large groups of South Asian, Chinese, Black and Filipino workers.
Likewise, large numbers of immigrant workers will experience job loss especially in pharmaceuticals where immigrant workers make up 48.6 per cent of the total—as well as motor vehicle parts (43.5 per cent) and food manufacturing (37.9 per cent). This includes recent immigrants who arrived in Canada after 2011 and non-permanent residents who make up a disproportionate share of workers in food manufacturing as compared to their share of the overall workforce.
As the impact of tariffs ripple through the economy, many more workers in “trade-supporting” industries will be affected—those in finance, professional services and transportation. Racialized workers, for example, make up 30 per cent or more of these sectors, while women account for more than half of those in finance and insurance.
And then, of course, there are the knock-on effects in communities across the country as unemployment rises and discretionary spending declines. Canadians remember the pain of past recessions. Resource towns certainly know what it’s like to live through the boom and bust of commodity prices. Health and well-being are impacted, gender-based violence rises, community ties are strained. Health and social services are ill prepared, drained and strained by years of austerity and the aftermath of the pandemic.
Standing together
Governments in Canada need to be prepared to support workers and communities impacted by the crisis head on. The Canadian Centre for Policy Alternatives is arguing for a comprehensive and radical approach that goes beyond counter-tariffs and recognizes the crucial moment we are in.
This must include emergency benefits and supports for impacted workers, businesses and communities—taking the lessons of COVID-19 into account. Governments should also consider the best strategies for mitigating the potentially devastating impact of rising inflation—including price controls on essential goods and shelter. This is a moment to lay the foundation for a more resilient, secure and just future for everyone.
To this end, it will be imperative to centre the experiences of marginalized communities in all of our emergency responses. Experience shows time and again that, amidst crisis, the needs of the most vulnerable get shoved to the side. Indeed, we are in a moment when to even raise such concerns is seen as contemptible. The all-out attack on diversity, inclusion and equity (DEI) programs in the United States—and the backlash in Canada—are terrifying in scale and impact.
As Debra Thompson argues, the vilification of DEI is a Trojan horse for regressive policies of all kinds. It’s an attack on immigration, women’s reproductive rights, civil rights, the social safety net, climate change and our democracy. The attack on Canada and marginalized communities is all of a piece. It’s a moment to stand together to protect our collective future.