As we await tomorrow’s “Liberation Day” tariff announcement from the White House, the threat to Canadian jobs couldn’t be clearer.
Even with most of President Trump’s threatened tariffs paused until now, auto manufacturers have been pulling back investments since January. In February, Stellantis paused its Jeep Compass production in Ontario, while GM has warned that it may consider relocating its plants to the U.S., should the tariffs become permanent. If levies do come to pass, however, the sector could shut down within a week, putting as many as 125,000 jobs at risk.
This comes in addition to the 25 per cent tariffs on Canadian steel and aluminum imposed in early March. In the weeks since, hundreds of workers have been laid off, with some factories facing closures.
As CCPA Senior Researcher Katherine Scott has argued, a tariff-induced recession would likely have a worse economic impact than the COVID-19 pandemic. While job losses during the pandemic were concentrated among low-wage service workers, tariffs represent a unique and existential threat to this country’s manufacturing and resource sectors. According to one estimate by the United Steelworkers union, as many as 100,000 of its members in the steel and aluminum industry could be impacted.
That said, unemployment has been ticking upward since July 2022 and is currently one point higher than before the wave of pandemic layoffs. In other words, the Canadian economy had vulnerabilities predating the trade war which are now likely to be compounded by it.
Prolonged tariffs on steel, aluminum, and automotives will be detrimental to the thousands employed in the sector but Trump will likely not stop there. He has been threatening Canada’s lumber industry with increased tariffs, higher than the current duties of 14.5 per cent, whilst the potential for blanket levies on agricultural goods and natural resources persists.
As I have argued elsewhere, approaches to tariffs must not be limited to the same old medley of tax cuts, deregulation, and austerity. While the instinct may be to focus on incentives for corporate Canada, our politicians must not forget the actual “builders” in this country who stand to be most affected: the working class.
Relief, but for whom?
On March 7, the federal government announced $6.5 billion in support aimed largely at Canadian businesses. The objective was to offer some short-term relief from tariffs while paving the way for greater trade diversification. With the funding set to be administered by three federal agencies in the form of loans, the lion’s share, $5 billion, has been given to Export Development Canada, followed by Farm Credit Canada ($1 billion), and the Business Development Bank of Canada ($500 million).
A significant sum, it remains unclear what, if any, additional funding will be offered to affected workers. To date, federal support has come in the form of temporary flexibilities in its Employment Insurance Work-Sharing Program. This allows employers to reduce an employee’s hours, placing them partially on EI, without laying them off. Per the government’s framing, the program is intended to reduce the financial strains on businesses rather than extending additional relief to workers.
Consent between the parties, and relevant unions, is required for this “special measure” to be instituted. Though it places workers between a rock and a hard place, given the choice of a layoff or pay cut under EI.
On March 22, these measures were updated to waive the one-week waiting period and suspend the requirement that severance, vacation, or other money be spent before receiving funding. This provision is slated to be in effect for the next six months, while lower thresholds on EI eligibility are scheduled for the next three.
Again, however, no additional funding has been committed to the program. As the name suggests, these measures are intended to be temporary and their efficacy depends on how long tariffs last. If they extend beyond a few weeks, it is likely firms will opt to lay off workers altogether rather than stick to the federal program in its current form.
The prospect of higher unemployment is especially troubling as the threat of a tariff-induced recession rises. Crises of affordability are likely to exacerbate these circumstances as housing and grocery prices are also projected to climb. Declining economic growth and inflationary pressures mean that the potential for stagflation should be on everyone’s mind.
Alternative ways of preserving and strengthening Canada’s working class
Other than the “special measures” introduced for Employment Insurance, the federal government has offered few expanded protections for workers. The March 7 announcement pledged to return to the issue “as needed”, though the fluidity of the situation and current federal election complicates matters as the April 2 deadline looms.
Regardless of who the next prime minister is, the threat to Canadian workers is clear. The protecting and strengthening of the working class must be a key component of the next parliament’s mandate. Doing so, however, will require a rejection of worn-out, business-friendly inclinations of tax cuts and deregulation.
Short-term solutions to tariff precarity
Increasing EI eligibility and payments: As called for in the CCPA’s Alternative Federal Budget, higher payments for affected workers could help stabilize their financial situation while potentially offsetting some of the rising cost of goods as a result of tariffs.
Tackle price gouging: Per the Canadian Labour Congress, restrictions on the cost of staples and essential goods should be viewed as another way of ensuring life remains affordable for working families. Food prices spiked during the 2021-22 period and aren’t going down any time soon, as the threat of tariffs is likely to put households under further strain. To address this, governments should not only strengthen restrictions on price gouging but also institute caps on essentials, like groceries, for the duration of the trade war.
Strengthen the social safety net: In addition to these economically oriented measures, federal and provincial leaders should take steps to bolster and expand our social safety net. Access to health care is often top of mind for many Canadians but it must be complemented by robust public pharmacare, dental care, and mental health plans. This will ensure that regardless of the type of worker or community affected, they will continue to have reliable access to the social support they need.
