Based on coverage from The Globe and Mail, Toronto Star, Castanet, and Times Colonist.
A year after U.S. President Donald Trump’s “Liberation Day” duties jolted global trade, Canada’s jobs picture is starting to look less like a bounce-back and more like a long pause.
As the Canadian labour market grapples with stagnation in the wake of the Trump tariffs, the federal government has responded by investing in initiatives to enhance labour market data across the country, as detailed in a recent report on federal investments. This move aims to provide better insights into the evolving employment landscape amidst ongoing economic challenges.
Economists looking at roughly 12 months of data say the labour market held up better than many feared at first, but that early resilience is fading. The bigger theme now is stagnation, with the added twist that Canada’s shrinking labour pool is also limiting how much job growth is even possible.
One year of Trump tariffs hits Canada jobs
While the specific Liberation Day tariffs were recently ruled illegal by the U.S. Supreme Court, the damage for Canada didn’t wait for that. The tariff threat ramped up in February, and sector-specific tariffs landed in March. Many of those duties are still in effect.
Brendon Bernard, a senior economist at Indeed, summed up the past year’s labour market as “pretty stable” but better described as “static.” That matters for workers because “stable” can sound reassuring, but “static” means fewer new openings, slower hiring, and less leverage for people trying to switch jobs or negotiate pay.
Ontario manufacturing job losses lead declines
Statistics Canada’s labour force survey for February shows manufacturing has taken the biggest hit: 51,800 jobs lost over the past 12 months. The losses were concentrated in Ontario, where manufacturing has a larger footprint.
Andrew DiCapua, principal economist at the Canadian Chamber of Commerce, said he’s especially concerned about the auto sector. One reason: work contracts often run six or 12 months, so the full adjustment may not have shown up yet. As those contracts expire, he expects further “recalibration” in employment.
There are also signs production is cooling. Statistics Canada reported industrial capacity utilization at 78.5 per cent in the fourth quarter of last year, down modestly from the prior quarter. DiCapua’s worry is straightforward: if factories are producing less, they usually need fewer people to do the work.
Services sector growth offsets goods losses
Nationally, the picture is more mixed than the manufacturing numbers suggest. Over the year to February, goods-producing sectors collectively lost 34,200 positions. Services, meanwhile, gained 85,900 jobs, more than making up the difference.
Health care did the heavy lifting, adding 92,000 jobs over the past year. Desjardins senior economist Kari Norman tied that to provincial efforts to staff up for an aging population, a pressure point that isn’t going away.
That services strength helps explain why the unemployment rate hasn’t fallen apart over the past year, even as trade-exposed industries struggled.
February labour force survey shows cracks
February still delivered an ugly headline: an 84,000-job loss in the month, led by services. Economists caution that the labour force survey can swing sharply month to month.
Bernard pointed to another dataset, the Survey of Employment, Payrolls and Hours (SEPH), which is less timely but can be steadier. He noted that while the labour force survey showed strong job growth in late 2025, SEPH was flat, suggesting the underlying trend may be weaker and less dramatic than monthly spikes and drops imply.
Even so, Bernard said the direction is clear using either measure: job growth has slowed.
Canada population decline reshapes labour market
One major driver isn’t tariffs at all. Statistics Canada reported Canada’s population shrank in 2025, the first outright decline on record. Pair that with baby boomers retiring and fewer young workers entering the labour force, and you get a job market that can look “flat” even without a sharp recession-style downturn.
Bernard’s point: if the labour force isn’t growing, Canada needs fewer new jobs to keep unemployment steady. It also means monthly job losses may pop up more often in volatile data, simply because the trend line is no longer rising.
Desjardins expects unemployment to hold around 6.7 per cent through 2026, roughly where it sat in February, before improving next year.
Norman also flagged a few potential pockets of hiring: defence and construction, tied to projected increases in government spending. She added another possible boost for younger workers: if higher energy prices linked to the Iran war push up jet fuel and airfare costs, more families may choose closer-to-home vacations, supporting Canadian tourism and the seasonal jobs that come with it.
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