The Canadian economy is starting to get a taste of what’s to come if U.S. tariffs don’t come down.
What happened: The unemployment rate jumped to 6.9% in April as industries most exposed to trade, like manufacturing and natural resources, shed tens of thousands of jobs.
- Overall, the economy added 7,400 jobs, but only because of temporary hiring in the public sector for the federal election — excluding that factor, around 30,000 jobs were lost.
- The job market is also souring for young people, with unemployment among 18-to-25-year-olds rising to 14.5%, the highest mark outside of the pandemic since 2014.
Why it matters: This is the first jobs report that shows the direct impact of U.S. tariffs on Canada’s labour market, and points to the problems the economy will face so long as the trade war isn’t resolved.
- As job losses mount, the pain will spread from the most tariff-exposed sectors to other areas in the economy, like housing (which is already beginning to crack) and industries that depend on discretionary spending, like entertainment and travel.
What’s next: The surprisingly bad employment data will give the Bank of Canada more reason to cut rates at its next decision in June.—TS