Ontario’s August Employment Numbers: Yours to Discover

  

In the wake of Canada’s employment surge in July, August appears to have brought everyone back down to earth.  According to the August 2026 Labour Force Survey, Statistics Canada reported that employment declined by 42,000 (-0.2%) in August though the national unemployment rate remained unchanged at 6.4%.  Employment fell in business, building and other support services, public administration, natural resources and utilities though it increased 1.2 percent in in manufacturing adding 22,000 jobs. Nevertheless, it should be stressed that one should not agonize over month to month numbers given they do not indicate a trend and are frequently revised.

While Ontario lost jobs according to the raw numbers once the numbers are seasonally adjusted, Ontario saw a small increase of 5700 jobs which essentially means that employment growth in Ontario was lacklustre in August.  If one examines the seasonally adjusted numbers for Ontario and its major urban areas in August (Figure 1), Windsor, Toronto and Guelph added 6100, 5900 and 2600 jobs respectively.  It’s pretty much downhill from there in terms of the absolute number of jobs added with Thunder Bay, Oshawa, London, Hamilton and Ottawa seeing job losses.  Indeed, Hamilton and Ottawa were the hardest hit with Hamilton seeing 5100 jobs lost and Ottawa – still seeing cuts in public sector workers – fell by 9200 jobs.

 

 

If one looks at the growth rates in annual terms (August 2025 to August 2026; See Figure 2), seasonally adjusted monthly employment is still up substantially with Ontario seeing 96,500 jobs added since August 2025 for an increase of 1.2 percent in employment.  Guelph and Bellville-Quinte lead the annualized employment growth rates at 13.5, and 9.9 percent respectively followed by Windsor at 6.1 percent and Greater Sudbury, at 5 percent. Again, several cities saw negative employment growth with Thunder Bay and Kitchener-Waterloo-Cambridge at -0.3 percent, Hamilton at -1.4 percent and London at -4.5 percent.

 

 

The impact of tariffs and the trade war to date over the course of the year are not yet having a major impact in Ontario though the performance across some cities is a bit more mixed.  Hamilton, London and Ottawa appear to be having the most turmoil in their employment. The monthly August numbers in the wake of the July surge cannot really be taken as indicative of any trend though the annualized numbers suggest Ontario is holding its own.  As for the two northern Ontario CMAs, Figure 3 plots their longer-term employment evolution in more detail.

 

 

Both Thunder Bay and Greater Sudbury have seen increasing employment since 2021 based on both the profile of monthly numbers as well as the fitted trend.  Since August of 2021, Greater Sudbury has added over 18,000 jobs while Thunder Bay has added 4700.  In percent terms, employment in Greater Sudbury has grown by 22 percent while Thunder Bay has grown by 8 percent.  However, Thunder Bay, based on these monthly seasonally adjusted numbers peaked in January of 2026 at an employment level of 70,400 jobs meaning that over the last eight months, it has shed 3800 jobs.  This suggests that there has been a substantial slowdown in employment in Thunder Bay and may be tied to the winding up of major construction projects at places like the airport, assorted hotels and of course the new correctional facility as well as some reductions in public sector employment.

A return to the mid 60000s in total employment suggests that Thunder Bay will not be permanently staying above the 70000-job employment ceiling at least for now.

120,000 Could Be the Tip of The Iceberg

  

A CBC story this morning stated that “applications from people around the world seeking Canadian citizenship certificates have been rising rapidly in recent months, fuelled by thousands of applications from the United States.”  Under Bill C-3, those who can prove they were descended from a Canadian ancestor even if that ancestor left several generations ago can now apply for citizenship.  Apparently, half of the applications are from the United States and the number of applications in general has soared to the point where there are now about 120,000 applications for citizenship waiting to be adjudicated and processed.

This is potentially just a drop in the bucket given that since the mid 19th century, literally several million Canadians emigrated to the United States.  The period from 1867 to 1896 prior to the opening of the Canadian west, was a period of relatively anemic economic growth in Canada and many residents of Canada crossed the border into the opportunities offered by the larger US economy.

Indeed, by the 1910 US Census, Canadians were one of the largest categories of foreigners in the United States. As estimated by G.E. Jackson in a 1923 article in the American Academy of Political and Social Science, between 1850 and 1920, 1,890,000 Canadian born citizens moved to the United States.  Figure 1 provides a chart of the numbers on Canadian net emigration to the United States provided by Jackson in his article. Note the decline after 1900 as the Canadian wheat boom era and prairie settlement and the industrialization of central Canada offered more opportunities and slowed the outflow.

 

In 1910, there were 1,204,637 Canadian born residents living in the United States.  One imagines that their descendants easily number ten-fold today.  If there are 10 to 12 million Americans of Canadian ancestry, then potentially, there could be many more applications to come regarding the recovery of lost Canadian citizenship.

Of course, it is unlikely that there will be ten million applications for lost citizenship from the United States, but the ultimate numbers could be more substantial than one might think.  In any event, this story certainly helps highlight what for many Canadians is a forgotten aspect of our past.

The Real Issue in Thunder Bay’s Municipal Election

  

With the fall municipal election looming and the slate of ward candidates being somewhat thin ahead of the August 21^st filing deadline, Thunder Bay’s municipal race is not as contested as the 2022 election – at least aside from the mayor’s chair.  That year saw six candidates vie for the mayor’s position and 54 candidates for assorted councillor positions. At present, there are seven candidates for mayor but only seventeen running for council positions with several wards having only one candidate.  There is of course still over a week to go, and one can expect more candidates to file.

There are any number of reasons why there may currently be a dearth of candidates.  One reason may simply be to keep your powder dry.  After all, once you have filed you are campaigning and become a target for others and it is useful, especially if you are established, to minimize the amount of time you have to campaign.  On the other hand, there have been a significant number of current council members who have stated they are not running again and that may indicate the positions have become less attractive for reasons ranging from compensation to social media attacks.  After all, when a ward incumbent leaves the position, one might expect it would attract more entry.

Then, there is the possibility that being a councillor does not really seem to provide much influence over municipal issues given that issues have become increasingly complex and much is being dictated by the province.  Moreover, the role of council increasingly seems to be one of simply selecting from options provided by administration transforming the role more into that of an advisory board to the city manager.   It is not that councillors cannot rear up and change things but the complexity and intractability of some of the current issues (crime, infrastructure, green space, housing affordability, homelessness) make the task particularly daunting given the abuse that comes with the process.

Of course, the real sleeper issue here is not even the current dearth of candidates but the composition of the mayor’s race.  There are seven candidates at present for the position but only one has previously held municipal office or any elected office for that matter.  Now that in of itself is not necessarily a problem.  After all, this is Canada and our current Prime Minister went into the top job without ever having held any elected office.  If a former central banker can become prime minister, then surely local businesspeople and professionals can become mayor without having previously been a mayor or councillor.

The real issue with respect to the mayor’s position is the following.  Ontario now provides for strong mayor powers that ostensibly are tied to provincial priorities such as housing, transit and infrastructure.  These powers if exercised include proposing the municipal budget (subject to a two-thirds veto by council), assuming the powers of the Chief Administrative Officer, hiring and dismissing of staff including the Chief Administrative Officer (but excluding certain positions such as the City Treasurer, police and fire chief, etc.…) and the vetoing of bylaws deemed to interfere with provincial priorities.  These can potentially be very substantial powers and to his credit, the outgoing mayor formally declared his intention not to use those powers with respect to budget issues though he did say he would consider using them regarding an issue with animal keeping bylaws.

However, there now a slate of mayoral candidates with a range of backgrounds and experiences and given what we know about them, how might they interpret and use these powers?  As we move into the fall and the election heats up, there are a number of important questions that need to be addressed and answered by anyone seeking the mayor’s chair.  Along with their “vision” for Thunder Bay, they need to explain whether or not they would seek to use strong mayor powers and what are the issues and circumstances that they believe would warrant the exercise of such powers. The presence of strong powers also requires their responsible use and we need all the information we can get on that.

 

A Trade Agreement or Economic Anschluss?

  

As the interminable trade negotiations between Canada and the United States continue, in the absence of inside information from being at the table, one is left with trying to figure out what is going on by relying on the snippets and reports that make their way into media stories.  One of the most recent accounts as to where we are at in the Globe and Mail paints a picture of Canada that runs contrary to the public “elbows up” domestic rhetoric.  Essentially, according to this report “Canada and the United States are negotiating a deal in which Ottawa would concede on a long list of Trump administration trade demands in exchange for some relief on sectoral tariffs, as talks intensify less than two weeks before another round of threatened American levies.” Indeed, the tendency towards concessions was noted in another less flattering Globe and Mail piece.

Essentially, Canada would remove its retaliatory tariffs, return U.S. alcohol to the shelves, agree to Washington’s views on dairy quotas and in return get lower tariffs on steel and aluminum, some relief on auto and forest product tariffs and avoid the August 19^th tariff increases.  However, there is going to be a baseline set of tariffs on all Canadian goods no matter what, which will be part of continuing negotiations into the fall and we are expected to make good on our purchase of F-35 fighter jets as well as make additional commitments to joint North American security which will inevitably involve more purchases of U.S. military goods. Any new United States-Mexico-Canada trade arrangement down the road will essentially be an assortment of separate managed deals as dictated by the United States united by a continued tariff albeit one that probably favours us relative to countries outside North America. 

In some respects, one would have to say that we should not be surprised if this is the outcome.  A country with 75 percent of its exports going to a single market does not have the leverage it might imagine unless it wants to play hardball on crucial exports like oil, gas, potash and electricity and the Prime Minister has already given up that card.  Ultimately not using it is one thing but stating in advance that it will not be used is something else. The Americans want tariffs because they see them as both a way to onshore production as well as a potentially lucrative source of revenue.  And whose exports are a better source of revenue than Canada and Mexico given the sheer volume of trade.  The Americans will certainly not want to reduce their “tax base” by exempting either us or Mexico. As for the fact that tariffs on our goods are paid for by American consumers – well, it is a de facto consumption tax on Americans and if Americans want to avoid it, they can consume American products.  From the Trumpian perspective it is a win-win situation despite the fact that the evidence to date suggests that this is not working as well as they would like.

Currently, what the Americans seem to be proposing is a world where they levy tariffs on us in terms of whatever goods they want and at whatever rate they choose while we continue to admit all their products tariff free as well as spend Canadian tax dollars on American military goods. After all of our elbows up rhetoric, this is the deal it would appear we are on the road to accepting.  The real question is can we come up with a better approach?  Obviously, the best approach is multilateral free trade given the shared economic and geographic space occupied by Canada, the US and Mexico but this is now not on the table.   

 I would have to venture once again that what Canada should pursue with the Americans is essentially a deal modelled in part on the 1854 Reciprocity Treaty.  Both sides would let in raw natural resource and raw agricultural imports duty free. This would satisfy our commitments as reliable providers of the goods the Americans seem to want from us.  It would also help keep food costs down for consumers on both sides.  However, all imports of non-raw-natural resource and raw agricultural imports – anything value added - could have tariffs levied on them by either side.  (For example, oil and natural gas duty free but gasoline and petroleum products could be tariffed. Milk duty free but butter and cheese can be tariffed) The rates can be jointly negotiated, or they can simply be left up to each side based on what they think their consumers can bear and what revenues each side thinks that they think they can get. It all sounds so very 19th century but these seem to be the times we are in.

Naturally, this is a not very good outcome but think back to the period between 1870 and 1930 when Canada had a much smaller domestic market and was behind a tariff wall.  There was still economic growth and while growth in an environment of free trade would have been greater, it was not an available option.  We now have a market of 40 million people and if we combine it with a set of tax reforms that lower corporate and personal income tax rates, that could help compensate for the higher costs imposed by tariffs on American imports. Add in further reductions of inter-provincial trade restrictions and we may actually achieve the internal common market that should have been brought into existence in 1867.

Freer trade with the United States was something that was achieved over several generations and when it worked it worked well for both sides. Again, it does not seem to be an available option.  Think of it another way.  If we simply accept an outcome whereby the Americans dictate all the terms and tariffs as well as well as continue to direct our military purchases towards their goods and then arbitrarily change the terms whenever they feel it is to their benefit, well in a sense you have indeed become the 51^st state but without any of the benefits.  If the Carney government negotiates a trade deal in which we essentially grant the Americans everything they want and we obtain only what they deign to grant us, then we will have negotiated an economic capitulation and Anschluss and not a trade agreement.  The choice facing the Carney government is either a smaller and slower growing protectionist Canadian economy (which some might argue we have already partly achieved with the economic policies of the last decade) or Economic Anschluss with the Americans in which the Americans receive all the economic benefits of Canada as an American territory without any of the political costs.

 

Thunder Bay, Sudbury and Ontario: More Crime Trends

  

Well, with so much data available in the recent releases of crime data from statistics Canada, another crime post is definitely in order especially as a way to mark the end of the civic holiday long weekend.  This time, a focus on Thunder Bay and Greater Sudbury with respect to trends over time given they are northern Ontario’s two largest metropolitan centers, along with a comparison to Ontario as a whole to put things in perspective.  Figure 1a presents the 2025 rates for both all-criminal code incidents (excluding traffic violations) as well as the violent crime rate for Thunder Bay, Greater Sudbury, and Ontario.  As Figure 1a shows, Thunder Bay is definitely experiencing higher police reported crime rates than either Greater Sudbury or Ontario as a whole. 

 

In 2025, Thunder Bay’s crime rate was 8,374 crimes per 100,000 population compared to 4,706 per 100,000 for Greater Sudbury and 4,297 per 100,000 for Ontario.  Thunder Bay’s crime rate in 2025 was 95 percent greater than Ontario and 10 percent more tin the case of  Greater Sudbury.  In terms of violent crime, Thunder Bay’s rate was 2,249 per 100,000 compared to 1,177 for Greater Sudbury and 1,078 for Ontario. Violent crime in Thunder Bay in 2025 was109 percent greater than the Ontario rate whereas Greater Sudbury was 9 percent more. 

As well, Figure 1b shows the homicide rate in Thunder Bay for 2025 was 6.1 per 100,000 while in Sudbury it was 4.1 per 100,000 and only 1.3 per 100,000 in Ontario as a whole.  Needless to say, crime rates in Thunder Bay and Sudbury are above the rates for Ontario as a whole but Thunder Bay in general is double the Ontario rate while Sudbury is only about 10 percent more.  However, in terms of homicides, both cities were well above the Ontario rate in 2025 with Thunder Bay 369 percent greater than Ontario as a whole and Sudbury 215 percent greater.

Figure 2 presents a dual scale chart for Ontario with total crimes and violent crimes per 100,000 on the left vertical axis and the homicide rate per 100,000 on the right.  Observations for the three series are plotted from 1998 to 2025 with a linear trend fitted to each series.  If one looks at the three raw series, crime rates including violent crimes and homicides generally declined from 1998 to about 2014 and then started to rise.  Over that period, the crime rate in Ontario went from 7,019 per 100,000 to 3,549 per 100,000 while the violent crime rate declined from 1,222 to 789.  Homicides also fell from 1.4 to 1.2 per 100,000. However, since then, all have increased with the crime rate in 2025 reaching 4,297 per 100,000, violent crime reaching 1,078 and the homicide rate up to 1.3 per 100,000.  In terms of an overall trend, violent crime and total crime rates over the 1998 to 2025 period still trend downwards but the homicide rate in Ontario now shows a rising long-term trend.

 

Figures 3 and 4 present parallel charts for Thunder Bay and Greater Sudbury.  Both cities follow patterns similar to the rest of the province in that overall crime and violent crime rates decline from 1998 to 2014 and then start to rise with the overall linear trend being downward for the overall 1998 to 2025 period.  Both also show noticeable rising homicide rates over the long term and declining overall crime rates when a linear trend is fitted to the 1998 to 2025 data. In the case of violent crime over the 1998 to 2025 period, Thunder Bay shows a declining violent crime rate when the linear trend is fitted while Greater Sudbury shows a gently rising violent crime rate trend.

 

 

Nevertheless, crime is a matter of both level and trend when making comparisons so Figures 5 and 6 focus on the two most serious categories –violent crimes and homicides – to compare Thunder Bay, Greater Sudbury, and Ontario more directly.  Figure 5 presents the violent crime rates and shows that Thunder Bay and Ontario do indeed trend down while Greater Sudbury trends up over the 1998 to 2025 period.  However, when one looks at the gap between Thunder Bay, Sudbury and Ontario, based on the trends, it will be the end of the 21st century when Thunder Bay matches Sudbury’s violent crime rate while it looks like it will always be double the Ontario rate. 

 

 

Things look somewhat worse when it comes to the homicide rate (see figure 6).  Both Thunder Bay and Greater Sudbury have seen a major spike in their homicide rates since 2020 which has pulled their trend lines upwards.  However, Thunder Bay is definitely in a class of its own with a level of homicides as well as an upward trajectory that makes the homicide rates in Greater Sudbury and Ontario look modest by comparison.  However, it was not always so. Up until 2008, while homicide rates in both Greater Sudbury and Thunder Bay fluctuated around the Ontario numbers, they tended to parallel each other. Indeed, for the 1998 to 2008 period, the average annual homicide rate (per 100,000 population) in Thunder Bay was 1.4, Greater Sudbury 1.4, and for Ontario it was 1.5.  For the 2015 to 2025 period, the average homicide rate in Thunder Bay was 6.1 while for Greater Sudbury it was 2.2 and for Ontario 1.6.

Taken over the long run, Thunder Bay has always had generally higher crime rates than Ontario as a whole and the gap has been fairly consistent.  However, its reputation as Ontario’s “murder city” is a relatively recent phenomenon. Thunder Bay’s average homicide rates were not out of line with the rest of the province prior to 2008 and it has only been since then that homicide rates in Thunder Bay have soared. It is indeed an interesting question as to what factors are responsible for the increase since 2008.  What is it about the post 2008 period that makes that year in Thunder Bay such a break with the past when it comes to homicides? Sudbury has seen a similar type of spike in homicide rates since 2015 though it remains to be seen if that new upward trend will continue.  Given that this is a municipal election year in Ontario, these numbers should be an interesting focus for debate.

Crime, Ontario and Thunder Bay

  

Statistics Canada released the police reported crime statistics for Canada in 2025 last week and the overall trends were a decline in both the conventional Crime Rate (CR) as well as the Crime Severity Index (CSI).  According to Statistics Canada, in 2025 the national CSI dropped by 5 percent while the CR declined by 2 percent.  In other words, both the number of crimes per 100,000 population (excluding traffic violations) fell as well as the seriousness of those crimes. Relative to their historic peak in the early 1990s, crime rates are still down dramatically though they are up from 2015 which marks the start of a reversal of the long-term downward trend. However, since 2023, both crime severity and crime rates appear to have declined.

Ontario reflects the national trends with crime severity in 2025 down 6 percent from the year previous (though still up 12 percent from 2015) and the crime rate down 4 percent from the previous year but up 20 percent from 2015.  The Ontario numbers vary when its major CMAs are examined with quite a few CMAs up while others are down.  However, the largest cities – Toronto and Ottawa – are both down and they of course affect the provincial totals dramatically given together they account for well over half of Ontario’s population.  As for northern Ontario CMAs – Greater Sudbury in 2025 saw a 2 percent decline in its CSI but a 3 percent increase in its crime rate while Thunder Bay saw a 3 percent increase in its CSI and an 18 percent rise in its crime rate – the largest increases across Canada’s 41 CMAs. However, Thunder Bay did not have the highest total crime rate in the country as that dubious distinction went to Chilliwack, B.C. (at 11,455 crimes per 100,000) while Thunder Bay was a bit further down the list in 6th place (after Kamloops, Red Deer, Nanaimo and Kelowna) at 8,373 crimes per 100,000.

Comparing Thunder Bay to the other major Ontario CMAs is done in Figure 1 and Thunder Bay definitely stands out when compared to other Ontario cities.  Thunder Bay is first at 8,374 crimes per 100,000 with Peterborough second at 5,386.  At the bottom are Toronto and Barrie at 3,950 and 3,777 respectively.  In terms of growth (Figure 2), about half of Ontario CMAs saw their crime rates decline and the other half saw an increase.  Thunder Bay is not only growing in terms of population, housing, construction and retail but also unfortunately with respect to crime.  Thunder Bay saw the largest increase at 18 percent followed by Brantford at 10 percent and then London at 7 percent.  Toronto and Windsor saw the largest declines at 5 percent and 10 percent respectively. 

 

 

A logical question is what policing resources are available to these Ontario cities to fight crime and Figure 3 presents police officers per 100,000 using data from Statistics Canada (TABLE 35100077).  Here it should be noted that the crime figures correspond to CMAs, whereas the police statistics are for municipal police services whose boundaries may not exactly correspond with the CMA boundaries. Nevertheless, the rankings proceed and here Thunder Bay is again at the top of the rankings of these Ontario municipal forces with 197 police officers per 100,000 in 2025. Next highest is Windsor at 172 followed by Toronto at 171.  At the bottom of the rankings are London, Ottawa and Kitchener-Waterloo-Cambridge (Waterloo Region Police) at 143, 135 and 118 officers per 100,000 respectively. Thunder Bay has the highest crime rate across major Ontario cities and it has the highest policing resources per capita.

 

However, Figure 4 looks at the policing resources in a somewhat different way.  It looks at the growth in police officers per 100,000 and does so between 2023 and 2025 (because Statistics Canada’s annual data does not have an entry for 2024). Here the numbers show that while the majority of Ontario municipal police forces saw growth in police officers per 100,000 – about one third did not.  Those showing a decline are Sudbury, Windsor, Kingston, Thunder Bay and Brantford. Of these five cities showing a decline in policing resources per capita, four also saw an increase in crime rates in 2025 with the exception being Windsor.

 

So, is there a relationship between policing resources and crime?  Simple correlations between police numbers and crime rates are probably not the best way to evaluate this type of relationship and a regression approach where confounding factors like demographics, community income and land area are considered are better.  Some might argue that wealthier communities with better socio-economic conditions can both afford more police as well as have the determinants for lower crime rates.  Some might argue that more police simply means more crime gets reported and could paradoxically result in a positive relationship between crime rates and policing. Nevertheless, it can be done simply and Figures 5 and 6 are presented together because they show an interesting feature of the data when you plot the crime rate against the number of police officers.  

 

Figure 5 plots the crime rate per 100,000 for all the Ontario CMAs against the number the number of police officers per 100,000 and the correlation is positive when a linear trend is fitted. However, that trend is heavily influenced by one observation in the northeast corner of the chart which "pulls" the line upward.  That is Thunder Bay.  If you remove Thunder Bay and redraw the chart with linear trend (Figure 6) you get the more conventional result that more police officers per capita are correlated with lower crime rates.  Thunder Bay is what one can refer to as an “outlier”.  It is not like the others.

Of course, it might be that using levels is not the way to do such a comparison and what might be better is to plot the recent growth in the crime rate against the recent growth in police officers per 100,000.  This is done in Figure 7 and the result is (including Thunder Bay) more conventional and in line with the expectation that if the number of police officers per 100,000 population is growing, the crime rate should see lower growth rates or even declines. Thunder Bay in this chart is in the northwest quadrant with a decline in per capita police resources in 2025 and an increase in crime rates.

 

Still, Thunder Bay even if its recent policing resources per capita have declined, nevertheless has the most police officers per capita of the Ontario cities in this comparison.  Does this mean there is an efficiency or effectiveness problem? Again, one way to look at this is to take the statistics and compute the reported crimes per police officer.  Figure 8 does this and the ranking shows that Thunder Bay has the third highest reported crimes per police officer of these Ontario cities.  In other words, there are a lot of crimes being reported by the police.  If one wants to use crimes reported per police officer as a productivity or effectiveness measure, then the Thunder Bay Police Service is one of the most “productive or effective” in Ontario.  They are catching a lot of crime.

 

What does this mean for crime in Thunder Bay?  Why are crime rates in Thunder Bay so high despite having one of the largest police forces in per capita terms?  It is because Thunder Bay simply has a lot of crime and it is getting worse and overwhelming the resources available.  If one may hypothesize, Thunder Bay is indeed unique in some of the economic and social forces that have shaped its past and continue to shape its future.  It is located at the crossroads of the country which means it is a transport node not only for grain, potash and transport trucks but also for criminals and criminal activity. 

In terms of social elements, Thunder Bay is a community that has always had a frontier edge and that includes an element of independence that can often border on lawlessness.  While it is true that Canadian cities have all become a bit more lawless in the wake of the COVID pandemic, Thunder Bay seems further along the path when compared to even the GTA. Lawlessness progresses in degrees.  Not following parking bylaws for snow removal or walking your dog across other people’s lawns is the start and suggests a lack of concern for others and the public good.  Indulging in rolling stops at stop signs, speeding and then running a red light is the next step.   I have seen vehicles doing U-turns on the Thunder Bay expressway seemingly oblivious to other traffic.  Increased theft in stores is yet another progression and then there is the infiltration of Thunder Bay by increased numbers of drug dealers coming from Toronto due to it being both a captive and lucrative market in its own right as well as a gateway to northern reserves.  Then comes the litany of domestic abuse and household violence largely springing from drug and alcohol abuse which also consumes police resources.

The police in Thunder Bay are essentially being overwhelmed.  They are being asked to solve not only Thunder Bay’s crime and social problems – which are substantial in their own right - but to deal with a wider range of provincial and national crime trends due to Thunder Bay’s location as a transport crossroads. Do you want to see crime rates in Thunder Bay come down?  Additional resources from the O.P.P. and the R.C.M.P need to be deployed outside the city limits along the highways leading to the city as well as the airport, port and railyards.   Sniffer dogs going through luggage at the airport and a more visible police presence there is needed.  There should be a lot more “seat belt” checks and “speeding enforcements” on the 11/17 and Highway 61 corridors leading to the city as well as more transport truck “safety inspections.”

It is not just the resource available but how they are deployed and used.  Moreover, crime fighting requires cooperation across jurisdictions and better coordination of efforts between the assorted policing levels.  Thunder Bay’s crime rate can be reduced but given the national and regional spillovers of the problem both into and out of Thunder Bay, it is not just the responsibility of the Thunder Bay Police Service.  In some ways, Thunder Bay’s role as a transport choke point is both the source of its crime problems and can facilitate its potential solution. At least, that is what the numbers are telling me.

An "End" Game in the Trade War?

  

As Canada processes the new Trump tariff threat and considers its options, assuming the tariffs are actually implemented, one imagines that retaliatory measures will eventually be employed.  These can consist of either tariffs on American imports or export taxes on Canadian export goods in high demand by the American market.  What is interesting in the list of proposed American tariffs released yesterday is the 50 percent tariff on “Toilet or facial tissue stock, towel or napkin stock and similar paper used for household or sanitary purposes, in rolls or sheets not of cellulose wadding” imported from Canada. The United States is a very high per capita consumer of toilet paper using annually an average of 140 rolls or 12.7 kgs per person.  It seems odd that in the age of affordability, the American government would make such a vital commodity more expensive for the average American but then above average Americans have probably been corrupted by bidets and are oblivious to the sanitary expenses of their lower income citizens.

A tariff on toilet paper can of course lead to an immense amount to low brow humour especially in the wake of the current deluge of diarrhea plaguing the United States. It does lead to the question of how much leverage Canada might have over the United States when it comes to toilet paper.  According to statistics from the World Bank, in 2023 the United States imported 186,304,000 kgs of toilet paper of which Canada supplied 96,957,900. As Figure 1 illustrates, Canada is the largest supplier of toilet paper to the United States accounting for over half of its imports.  The next largest is Mexico at 18 percent followed by China (14 percent), Indonesia (8.3 percent) and Vietnam (4.1 percent) with the rest of the world accounting for just over three percent.  On the surface, it looks like Canada has an intestinal stranglehold that it could play to its advantage.

 

However, this analysis is misleading because while Canada accounts for over 50 percent of U.S. toilet paper imports, imported toilet paper accounts for anywhere between 5 and 10 percent of American toilet paper consumption.  In other worlds, any leverage from being such an important supplier is lost in the sheer size of total American consumption most of which is domestically supplied.  Given that Canada supplies at best a few percent of total U.S. toilet paper consumption, a more expensive Canadian product either via tariffs or export taxes will be replaced either with more domestic production or cheaper imports. 

Retaliating via an export tax or export ban on toilet paper to the United States is at best a tongue in cheek approach to resolving our trade disputes with the United States.  However, the toilet paper case is an important illustration of the dilemma that Canada faces when it comes to retaliation.  While we are the largest foreign supplier of many imported goods for the Americans, our share of their total market consumption is often so small as to be negligible which of course reduces our leverage.  There are only a handful of commodities whereby Canada has a noticeably significant share of the American market, and these are mainly resource products such as oil, natural gas and potash.

For example, about 60 percent of American crude oil is produced domestically with the remainder imported and of that imported share, Canada accounts for nearly two-thirds.  In other words, the United States relies on Canada for 20 to 25 percent of its oil.  The United States also relies on 85 to 90 percent of its potash supply from Canada which is a critical input into American food production.  Export taxes on these commodities would indeed get noticed in the United States but one wonders if even that will have any effect on decisions made by the Trump administration. After all, the United States gets over 50 percent of its aluminum from Canada and yet they have still put heavy tariffs on its import.

In terms of the end game here, should the Americans continue on their current path of tariffs, there are two alternatives. Canada could accept whatever terms the Americans want given our export dependence and lack of diversification which, based on their current position seems to be a deal that includes tariffs, will lead us to losing employment in many value added industries.  Or, we can respond with our own broad based tariffs on our imports of U.S. value added products which will raise costs to Canadian consumers but preserve a larger share of our non-resource based industries. Neither is an attractive economic option, and the deciding factor will be which alternative is most acceptable to the Canadian public.  In the interim, we wait to see if they actually follow through with the tariffs.

The Road(s) Ahead

  

The United States under President Trump has taken yet another jab at Canada’s economy with the announcement of new 50 percent tariffs on range of goods.  This is a negotiating tactic, designed to extract leverage in the upcoming negotiations but the move also sends important messages about the ultimate aims of the United States with respect to its relationship with Canada that we ignore at our peril.

If implemented, given that oil, gas, potash, fish and critical minerals are exempted, these tariffs will have little to no effect on Canada's resource sector and exports - which are about 40 percent of our exports to the USA. The duties are actually narrowly targeted at manufactured and consumer goods such as chemicals, plastics, electronics, alcohol, dairy and hockey sticks of all things.  These are actually all together a relatively small portion of our exports to the United States. Auto parts - a crucial part of the integrated supply chain are also exempt – for the time being.

So, the overall impact on the macroeconomy would be relatively small but those specific targeted products would be relatively hard hit.  Alberta and Saskatchewan are the least impacted. Ontario and Quebec are more heavily impacted.  More importantly, these new tariffs are a violation of CUSMA and raise the question as to whether the United States can be relied upon to adhere to any deal even if struck entirely on their terms. Moreover, it is clear that the American version of a new Canada-U.S. trade agreement is not going to be what we are looking for.

The American negotiating vision is for deals with Canada and Mexico that emphasize their roles as input providers to the U.S. economy and value-added chains of production rather than trade partners and on terms always favouring the United States. In the case of Canada, our role in the American input chain is oil and gas (provided to them at a discount), as well as potash, critical minerals and any other resource product they require but that makes room for their producers first, such as lumber. 

Despite the mutual gains from trade, they see our value added manufactured and consumer products as direct competition to American manufacturers given the similarity of the high-wage employment generated.   Despite our ongoing attempts at trade diversification, our current dependency on the United States market for three quarters of our trade reduces our bargaining power. 

In the case of Mexico, the American preference is also mainly for their resource products such as petroleum, minerals, and food and agricultural products but they will tolerate manufactured products such as electronics and medical devices and even auto parts made with cheaper Mexican labour  - that of course stays on their side of the border.  Canadian labour does not provide the American consumer market with cheap manufactured goods and so we are out of luck there.

It is unlikely that CUSMA is going to be renewed in its current form, and any future trade arrangement will see tariffs on Canadian goods that are both negotiated as well as imposed unilaterally on spur of the moment. The Americans seem to want the deal that they last got in 1854 under the Reciprocity Treaty whereby there was free trade in resource products and raw materials but continued tariffs on manufactured products – on both sides one should add. Oddly enough, the Americans ended that deal for an assortment of reasons including lobbying by American resource producers in what was then a more resource intensive United States, American perceptions that Canada benefitted more from the deal than they did (sometimes it seems nothing changes) and Britain’s tolerance for the Confederate side in the Civil War.  Canadian merchants advocated joining the United States if they did not get a trade deal in 1854 but once it ended, Confederation and creation of an east-west economy behind a substantial tariff wall followed.

So, what are our options? Well, one option is simply to throw in the towel and give the Americans everything they want on their terms and hope that ends it and we get on with our lives. Of course, the resulting impact on the Canadian economy would be a return to a more resource intensive economy in terms of our exports and the loss of some employment in value added manufacturing and consumer goods production. Our auto sector would be smaller but after adjustment more competitive as would a lot of other small business manufacturers.  Alberta, Saskatchewan and to a lesser extent the Atlantic region would be relatively unscathed. On the other hand, the remaining provinces would be hit hard.

Of course, that outcome qualitatively does not seem much different from a world where the Americans levy tariffs on all our non-resource exports to the United States and we levy tariffs on all of our non-resource imports from the United States.  Oddly enough, this almost sounds like an updated version of the 1854 Reciprocity Treaty which in the end was abrogated by the Americans because they thought we derived greater benefits from it.  Yet, President Trump does appear to be a 19^th century thinker when it comes to trade and tariffs so maybe this is where we should go. Free trade in natural resource and agricultural products but tariffs of our choice on everything else would as in the 19^th century protect smaller and less efficient Canadian producers – extensive as opposed to intensive economic growth.

The best outcome is one without tariffs and free trade between Canada and the United States and Mexico whose economies have a lot of complementarities and stand to gain substantially from freer trade.  Alas, for that to happen it takes two willing partners to tango, and the Americans currently prefer not a tango or a pas de trois but more of a freestyle solo dance performance.  If the Canadian economy was able to generate income and employment under a tariff regime when it was a small and dispersed market of 8 million people, surely it will survive a tariff trade world when it has a market of 40 million people.  Will we have to get by with less?  Sure. But, as a country, our declining productivity means that we have been getting by with less for a long time now.  If it is any satisfaction, the Americans will also be poorer with tariffs.

 

Is Ontario Spending Up to the Task of Managing Forest Fires?

  

The current wildfire season with its apocalyptic scenes from northern Ontario communities and the spread of smoke throughout the province has sparked debate about the adequacy of both the Ontario and federal government response.  The federal government has apparently finally been asked by the Ontario government for assistance with evacuations of affected communities.  While it seems odd that the federal government must be asked, apparently natural resources are a provincial responsibility though one might venture that the environmental impact on air quality can easily justify federal participation given that the environment is seen as a shared responsibility.  They have intervened in provincial jurisdictions such as health and social welfare (for example child care, dental, and pharmacare plans) where the provincial prerogative is stronger.

As well, the constitution also maintains a role for the federal government in maintaining peace, order and good government and one might think wildfires would qualify.  And then there is the federal role with respect to Indigenous peoples which should also be a reason for federal intervention in remote communities.  One wonders if earlier federal intervention might have been of assistance in the harrowing escape of the Namaygoosisagagun First Nation which was essentially left on its own. 

However, given that the provinces are expected to take the lead in such matters, the question arises as to whether in Ontario the resources allocated to natural resources and forest fire/wildfire suppression in general are sufficient.  One would expect that the Ontario government makes decisions about how much to plan on spending based on evidence available, though naturally if the fire season worsens, it would “upscale” the expenditures and response.  The evidence available consists of past forest fire seasons and Figure 1 uses data from Canada’s National Forestry Data Base and Natural Resources Canada and recent media releases  to plot Ontario’s total number of forest fires from all causes as well as the area burned in hectares for the 2018 to 2026 (as of July 16^th) period.

 

The results show that both the number of fires and the hectares burned fluctuate substantially from year to year.  A peak year was 2021 which saw 1,206 fires from all causes and 784,564 hectares consumed. However, what is quite interesting is that when linear trends are fitted to the data, the number of actual fires has been declining on average. Yet, the number of hectares burned has been trending upwards.  What this seems to suggest is that since 2018, on average, the number of incidents that the provincial emergency fire response needs to respond to has been declining which one suspects means that one can be more conservative in terms of the dollar amounts budgeted.  However, the severity and intensity of the fires have been increasing quite dramatically which would indicate a need for more resources.

 

Figure 2 uses data from Ontario Budgets to plot two series.  First, the total allocation for the Ministry of Natural Resources and Forestry since 2018 as well as the allocation divided by population to obtain the amount per capita.   As well, both series are in real dollars deflated using the Consumer Price Index for Ontario (Statistics Canada) with 2026 set as the base year.  Again, the allocations fluctuate from year to year but in real dollars, the total allocation has been trending upwards – more resources for the Ministry of Natural Resources and Forestry.  However, when adjusted for both inflation and population, the real per capita allocation has been flat. In other words, spending growth on the ministry has on average not exceeded the combination of both population growth and inflation.

 

Of greater interest is the subset of spending on emergency firefighting and that is provided in Figure 3 both in total as well as per capita, and again in 2026 dollars.  Both series fluctuate substantially as they reflect the severity of that year’s fire season.  As well, keep in mind that the 2026-27 numbers are budget estimates presented before the onset of this year’s fire season and are likely to be revised upwards substantially.  Nevertheless, real total emergency firefighting based on the numbers available since 2018 has trended down slightly from just over $200 million (2026 dollars) to just below $200 million.  Meanwhile, real per capita spending has trended down more noticeably from just under $15 dollars per Ontarian (in 2026 dollars) in 2018 to just over $11 dollars per person at present.

While the number of forest and wildfires has been trending downward – which might create an incentive to plan for spending less with upscaling when necessary – the severity of the fires in terms of the land area consumed has been growing substantially.  Increased severity of the fire season in terms of impact necessitates a more robust upfront long-term allocation of resources.  One should not wait for a northern Ontario tragedy like the 1909 Cobalt Fire (which destroyed half the town of 6,000 people and left half the population homeless) or the 1922 Temiskaming Fire (43 killed) or the Great Porcupine Fire of 1911 which killed 70 people or the 1916 Matheson/Iroquois Falls/Cochrane Fires (which killed an estimated 223 people).  The Matheson Fire led to the establishment of Forest Protection Branch of the Department of Lands, Forests and Mines which evolved into the Ontario Ministry of Natural Resources. We should not wait for events of similar scale before deciding to overhaul the fire management system and how we deal with the growing intensity of wildfires.