Canadian Businesses Brace for Layoffs Amid U.S. Tariff War: How Companies Are Responding

The escalating trade tensions between Canada and the United States have prompted Canadian businesses to reassess their operational strategies, with many anticipating significant workforce adjustments.

Anticipated Layoffs Amid Tariff Uncertainty

A recent survey by KPMG reveals that 50% of Canadian employers are proactively reducing production or laying off employees in anticipation of sustained tariffs. Additionally, 28% plan to initiate workforce reductions within four to six months if the trade dispute persists. Over the next year, half of the surveyed companies expect a decrease in their Canadian headcount, while 21% anticipate maintaining current staffing levels. 

The potential impact on employment is substantial, with experts warning that over one million Canadians could lose their jobs if U.S. tariffs remain in effect for more than a year. 

Strategic Responses to Mitigate Risks

In light of these challenges, 76% of businesses are conducting strategic reviews of their operations. This includes 80% of industrial manufacturing companies, 87% in the food processing sector, and 82% in the automotive industry. Furthermore, 62% are considering shifting production to the U.S. as a mitigation tactic if tariffs are imposed. While 46% report having three to five alternative markets outside the U.S., 52% acknowledge that relocating business to another jurisdiction would be challenging in the short and medium term. 

Calls for Government Action

The business community is advocating for decisive governmental measures to counteract U.S. tariffs. A significant majority (86%) support retaliatory tariffs, with regional backing as follows:

• Ontario: 89%
• Quebec: 85%
• British Columbia: 80%
• Alberta: 83%

Additionally, 88% of business leaders desire “strong and determined” political will at all levels of government to finally open up trade within Canada. Furthermore, 84% believe that eliminating interprovincial trade barriers is “extremely or very important” to the survival of their business in a trade war with the U.S., and 85% want these barriers removed as quickly as possible. 

Conclusion

The ongoing Canada-U.S. tariff dispute is compelling Canadian companies to make difficult decisions regarding production and employment. While many are proactively seeking strategies to mitigate risks, the potential for significant job losses looms large. Collaborative efforts between the business community and government are essential to navigate these turbulent times and safeguard Canada’s economic resilience.

Sources

How many Canadian companies expect layoffs amid Canada-US tariff war?

Canada’s services PMI falls to 5-month low on tariff concerns

Trudeau not willing to lift Canada’s retaliatory tariffs if Trump leaves some tariffs on Canada