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Canada’s job market could be getting squeezed if the economy shrinks further, and an increase in tariffs could mean more tough times ahead for some sectors and industries — which experts say could lead to further job cuts.
“We are in a very difficult moment and workers are already feeling the pain, but it would be even more destructive if we were to sign a bad deal,” says national president Lana Payne of Unifor, a private sector union which employs 320,000 workers in Canada.
“We need to put maximum pressure on the United States so that they are feeling the heat because it’s getting worse and worse there now. And that puts us in a better position to be able to negotiate as well.“
On Friday, the trade war escalated yet again after United States President Donald Trump increased tariffs on Canada by 10 per cent. This means that all Canadian goods imported into the U.S. that do not comply with the terms in the Canada-United States-Mexico Agreement free trade agreement (CUSMA) will see a 35 per cent duty added on — a jump from 25 per cent.
The new tariff effectively increases the base level for all goods that do not comply with the agreement, but there continue to be exceptions. These include a 50 per cent tariff on Canadian steel, aluminum and copper products, 25 per cent on automobiles and parts, and a 10 per cent tariff on Canadian energy imports into the U.S.
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Prime Minister Mark Carney said he was “disappointed” in Trump’s decision to increase tariffs, after several weeks of negotiations failed to reach a new trade deal by Friday’s deadline.
Prior to the deadline, Carney said he will only make a deal that is “best for Canada.”
“The Canadian Federation of Independent Business (CFIB) supports the view that no deal is better than a bad deal, but the lack of resolution means small firms will not be able to plan for the future or continue to put off difficult choices,” says president Dan Kelly at the CFIB.
“I do worry deeply that that layoffs will start to happen in large numbers. I spoke to one small business owner who said that he’s run out of money to be able to support his staff, and is in real need of some support.”
Many business owners in Canada have been able to absorb some or all of the tariff increases, sacrificing potential profits, and opting to support their workers as well as keep prices for customers relatively stable. However, sacrificing profits to maintain operations amid higher costs may not be an effective long-term strategy, so layoffs could be the other shoe that drops.
Many industry leaders are pushing the federal government to support Canadian workers impacted by the trade war with the revenue generated from retaliatory tariffs against the U.S.
“We need to use the tariff revenue that we have been collecting from the United States to help workers and industries that are being impacted the most right now. We have seen that happen in the steel industry. My advice would be that if we have to do this in the auto industry, that we are using these revenues to keep people working,” says Payne.
Not all industries have been impacted by Friday’s tariff increase, but some of the hardest-hit to date, including Canadian steel, are already in tough times, resulting in job cuts.
“Since March, we’ve seen 1,000 job losses. We’ve see production decline by 30 per cent at the 25 per cent tariff level. Then we’ve also seen the 50 per cent tariffs really putting an immense amount of challenge on our ability to serve the U.S. market. That is just not a feasible circumstance,” said president and CEO Catherine Cobden at the Canadian Steel Producers Association.
“With the job losses to date, our concern is that things are going to accelerate very quickly. Now that we’ve passed another deal marker, I think that there were some customers that were willing to wait it out. But we’ve had deal date after deal date that have come and gone, and now we must get very serious about our own circumstances here at home.”
“I also want to encourage everyone, every government in Canada, to use their government dollars to support Canadian jobs,” Cobden said.
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