In a
recent post in which I dealt with how the trade war had impacted Canada in
2025, I covered several indicators including employment and noted that all in
all Canada was not impacted in as dire a way as originally forecast when
President Trump began to levy his tariffs. As discussed, Canada saw an
employment increase of 134,000 jobs in 2025 notwithstanding that it also shed
about 50,000 in manufacturing. This is a national number and the impact of the
trade war like all things economic in the Canadian federation can be expected
to vary regionally. Indeed, as a recent report
from RBC
Economics showed, the average effective tariff rate on exports to the
United States is under 4 percent but it is highest in Ontario and Quebec exceeding
6 percent while Newfoundland and Labrador, New Brunswick, Alberta, Saskatchewan and
Prince Edward Island with fewer affected industries are at the other end with
less than 1% rates.
Ontario is exported oriented towards the United States and manufacturing
intensive especially focused on auto parts and production. Yet, even within Ontario, manufacturing
intensity and export orientation varies across the province so one would expect
different parts of Ontario to have been hit differently with respect to
employment losses. Figure 1 uses monthly
employment level by Ontario economic region to calculate each month’s job loss
or gain in 2025 and then tally them up and used to generate percent growth for
2025. For 2025, Ontario saw 71,500 jobs
created which is down from 2024 at 127,600 calculated using the same
methodology. Based on employment in December 2024, Ontario saw a 0.9 percent
increase in employment in 2025.
The results by economic region show that in 2025, only two
of Ontario’s 11 economic regions saw a decline in total employment.
Kingston-Pembroke saw a drop of 3.8 percent in employment while Ottawa
saw a 5 percent drop in 2025. These two
economic regions covering Eastern Ontario were likely hit disproportionately
not so much by the trade war but by cuts to the federal civil service. The
remainder of the province saw percent increases ranging from a high of 6
percent for Northwestern Ontario (6,200 jobs created) to a low of 0.6 percent for
Kitchener-Waterloo-Barrie (5,000 jobs created).
The Hamilton-Niagara region saw 1.7 percent growth (13,800 jobs created)
while Toronto saw 1.5 percent employment growth (nearly 60,000 jobs). Given the concentration of steel and auto
manufacturing in Hamilton-Niagara and Windsor-Sarnia, manufacturing jobs losses there were obviously counteracted by employment creation in other sectors.
Of course, the real question is whether this trend of employment growth will
continue. For the first quarter of 2026,
Ontario has seen its employment decline by 1.6 percent - that is, nearly
130,000 jobs. Of course, the first
quarter often sees employment losses in the aftermath of holiday season
spending so a more apt comparison would be to see what the first quarter of
2025 was like. In 2025, the January to March
period saw a 0.3 percent decline – about 21,000 jobs lost. The year is still
young, but it appears the first quarter of 2026 has been a much more difficult
period than either the first quarter of 2025 or even the first quarter of 2024
which saw employment decline by about 60,000 jobs (a 0.8 percent decline). If this is the case, 2026 may be the year the trade war comes home to fully roost in Ontario.
