News Analysis
With Canada’s unemployment rate rising by 0.2 percentage points to 6.9 percent in April, and a big bulk of the job losses being in the manufacturing and retail sectors, economists say the latest employment numbers indicate that the U.S. tariffs are beginning to show their impact.
“Trump’s tariffs are going to erode the manufacturing sector over time in Canada. We’re just at the start of it, in my view,” Jack Mintz, President’s Fellow at the University of Calgary’s School of Public Policy, told The Epoch Times.
Statistics Canada’s April Labour Force Survey shows that the biggest job losses were in the manufacturing sector followed by wholesale and retail trade.
According to the published data, there were 30,600 job losses in manufacturing (down 1.6 percent from March) and 26,800 in wholesale and retail trade (down 0.9 percent), while employment increased the most in public administration (up 3 percent) with a gain of 37,100 government jobs, followed by the finance, insurance, real estate, and rental and leasing sector with a gain of 23,700 jobs (up 1.6 percent).
Richard Dias, an analyst for IceCap Asset Management, says the decline in manufacturing jobs is “directly related” to American tariffs on Canada. U.S. President Donald Trump has imposed 25 percent tariffs on imports not covered under the United States-Mexico-Canada free trade agreement, and similar tariffs on autos, steel, and aluminum. Canada has responded with its own counter-tariffs on some U.S. products.
Nova Scotia saw the largest employment percentage decline in April, with employment dropping 1.6 percent (8,500 jobs), while employment in Ontario fell 0.4 percent (35,000 jobs.)
Other provinces saw an increase in employment in April, which rose 0.4 percent in Quebec, 0.6 percent in Alberta, 0.8 percent in Manitoba, and 1.6 percent in Newfoundland and Labrador. There was little change in the remaining provinces.
Ontario’s job losses reflected a decline in manufacturing due to the U.S. tariffs, losing 33,000 jobs in that sector in April. The city of Windsor, which is focused on automobile manufacturing, saw its unemployment rate jump by 1.4 percentage points to reach 10.7 percent in April. Toronto, meanwhile, saw its unemployment rate remain at 8.6 percent.
Ontario’s automotive sector employs around 144,400 people. While the United States placed 25 percent tariffs on all imported vehicles and auto parts in April, it later implemented a carve-out for Canadian auto parts compliant with the United States–Mexico–Canada Agreement starting in May.
April saw the largest decrease in manufacturing jobs across Canada since the U.S. tariffs were imposed—nearly 31,000 jobs, compared with 7,100 in March and 4,800 in February.
Mintz said Canada’s private sector is “weak” due to the impact of the U.S. tariffs, while lower global oil prices have led to layoffs in natural resources manufacturing. April saw 7,500 fewer jobs in that sector compared with a gain of 4,400 in March.
In addition, the price of crude oil declined from US$71 a barrel at the start of April to US$58 by May, as global U.S. tariffs were launched and OPEC countries increased their oil supplies.
Mintz said Canada can expect to see continued job losses in its manufacturing and retail sectors as the U.S. tariffs continue, with the most severe declines in Ontario. “If we don’t get those tariffs off, and I don’t think we will, Ontario is going to need a plan B that’s going to be less dependent on the auto industry,” he said.
Canada was already experiencing declining GDP per capita before the tariffs, and the job losses and the hit on the Canadian economy from the U.S. tariffs and Canada’s counter-tariffs would compound the impact.
Government Employment
Without the 37,100 government jobs added in April, Canada might have had a larger unemployment rate, Mintz said. “We would have had negative growth. We would have had a decline in employment.”The increase in government employment was related to preparations for the April 28 federal election, and most of those jobs were temporary and can be expected to disappear in May, he said. Mintz also suggested that the 0.8 percent increase in employment for Canadians aged 55 and older (35,000 more jobs) was due to older Canadians working at voting places.
Meanwhile, employment among 25- to 54-year-old women fell by 0.9 percent in April (60,000 fewer jobs), while employment among 25- to 54-year-old men increased by 0.3 percent (24,000 more jobs). The unemployment rate among males aged 15 to 24 increased by 1.1 percentage points to 15.4 percent in April, and by 0.4 percentage points to 5.8 percent for females of the same age.
Canada’s public service has grown by 26 percent since 2010, from 282,980 public servants that year to 357,247 in 2023. Prime Minister Mark Carney said prior to the election that he would cap the size of the federal public service and review program spending with “an emphasis on outcomes,” which could mean future job losses in that sector.
“It’s not healthy when your public sector is growing but your private sector is shrinking, because somebody has to pay the bills,” Mintz said. “So that’s going to be a real challenge over the next several years.”
