Well, we are now nearly six months into regime change in
American foreign and trade policy and the subsequent the trade war and it is
well worth seeing what the impact of the trade chaos and disruption has been on
employment growth in Canadian cities since January. Early in 2025, there was a highly
publicized report by the Canadian Chamber of Commerce that ranked Canadian
CMAs by their exposure and vulnerability to tariffs based on the trade
component of their economies. According
to the report, the most tariff exposed cities – and likely to face high economic
costs as a result – were Saint John, NB followed by Calgary, Windsor, Kitchener-Cambridge-Waterloo
and Brantford Ontario. Also high on the
list after these five were Guelph, Saguenay and Hamilton. At the bottom – the least
exposed was Sudbury followed by Kamloops, Nanaimo, Winnipeg and Regina.
So, how has employment growth in these cities fared since
January of 2025? Figure 1 plots ranked data
for Canadian CMAs obtained from Statistics
Canada and used to calculate the percent growth in employment from January
2025 to July 2025 (using three-month moving average seasonally adjusted data). A couple of notes. First, Prince Edward
Island is included in Figure 1 treating the small island province as a CMA. It is not in subsequent figures. Second, Belleville-Quinte is not included as the employment growth over these
six months came out to 90 percent and the official note mentioned there was a
small sample issue and to use caution in interpreting – so out it went. There
were small sample issues noted for several other CMAs, but they were retained
as the percentage changes did not seem as extreme as Belleville.
Figure 1 shows that Canada despite the trade war saw some employment
growth going from 20,912,00 jobs in January 2025 to 21,019,900 jobs by July
2025 – an increase of half a percent. Percent
growth in employment was greatest in Red Deer (10.4 percent), followed by
Hamilton (8.1 percent), Nanaimo (6.3 percent), Saint John New Brunswick (6
percent), Kamloops (5.8 percent) and Sudbury (5.8 percent). Of these 41 CMAs, well over half – 25 of them
– saw their employment grow since January 2025.
The remainder all saw their employment shrink to varying degrees with
the worst hit being Windsor (-5.2 percent), Trios-Rivieres (-4.6 percent),
Saguenay (-3.9 percent), Kelowna (-3.2 percent) and Kingston (-3 percent).
Based on what were projected to be the worst hit cities because
of their tariff exposure, it appears that there are some surprising
anomalies. For comparison purposes,
Figure 2 plots the CMAs ranked from highest (most exposed) to lowest (least
exposed) based on the February 2025 Canadian Chamber of Commerce study and
ranking. Saint John, NB was ranked most exposed and yet at 6 percent growth saw
the fourth highest gain in employment across Canada’s CMAs. Calgary was ranked second most exposed but at
1.2 percent employment growth (well above the national performance) ranked 15th
highest in terms of CMA employment performance.
Most interesting of all is Hamilton, Ontario where there has been much
gnashing of teeth and wailing about the demise of steel and its impact on the
local economy. Between January 2025 and
July 2025, Hamilton went from 421,3000 jobs to 455,600 jobs – an increase of
34,300 jobs or 8.1 percent growth in employment. Hamilton was ranked 8th highest in
terms of tariff exposure leading to the expectation
it would be nearer the bottom of any CMA employment growth and yet here we are at
essentially first place in the country among major cities (because Red Deer’s
numbers are also problematic given the small size of the sample apparently).
Now, at the same time, there are some cities where their negative
employment growth has matched expectations given their tariff exposure
ranking. Windsor was ranked third
highest in terms of tariff exposure and indeed has fared the worst of all the
CMAs. Trois Rivieres and Saguenay also were
highly exposed to tariffs and in both cases are also at the bottom in terms of employment
growth. Sudbury, on the other hand was
ranked least tariff exposed of all the CMAs and to expectations, its employment
growth has been quite good ranking 6th highest in the country.
What this all suggests is that the impact of the trade war and
tariffs has probably been more complex and variable on Canada’s assorted
economies than one might have expected based either on resilience or local responses
as well as other activities which may have taken up the slack. Hamilton, for example, seems rather anomalous
but the reality is that it has a large educational and medical sector and has
become a major transport and logistics hub both due to cargo through its
airport as well as the location of a large new Amazon distribution centre
there.
The relationship between tariff exposure and employment
growth across these CMAs is further explored in the two remaining figures. Figure 3 is a radar plot of ranked CMA
employment against the tariff exposure index, and some very large divergences
are obvious. Saint John ranks quite high
in terms of employment growth but there is an extremely large tariff exposure spike
associated with it. Calgary also is
approximately in the top third of employment growth but also has a rather large
tariff exposure spike. Figure 4 does a
scatterplot with trend charting the relationship between employment growth and
the tariff exposure index. Greater
tariff exposure is indeed related to lower employment growth on average but
there is a lot of variation around the trend.
All in all, some cities have done much better than one might
have expected, some have done worse, and some have been bang-on. The factors accounting for this variable performance
are probably as numerous and unique as the performance differences and greatly
influenced by local economic conditions and responses.
