Canada's Job Market Takes a Hit from Trump Tariffs: What It Means for Workers

The Canadian economy experienced a significant setback in July, losing tens of thousands of jobs and pushing the employment rate to an eight-month low. This downturn comes after a promising net addition of 83,000 jobs in June, highlighting the volatility in the labor market. The unemployment rate held steady at 6.9 percent, a multiyear high, defying analysts' expectations of a slight increase to 7 percent.

Key sectors affected by U.S. tariffs—steel, aluminum, and automobiles—have seen reduced hiring intentions and layoffs, with the manufacturing sector alone shrinking by nearly 10,000 jobs year-over-year in July. The United Steelworkers' national director for Canada reported about 1,000 layoffs among members, with predictions of more to come.

Despite these challenges, some areas have shown resilience. However, the overall employment growth has stagnated since the beginning of the year. Youth employment has been particularly hard hit, with the unemployment rate for workers aged 15 to 24 rising to 14.6 percent, the highest since September 2010, excluding the pandemic years.

The Bank of Canada's decision to keep the key policy rate unchanged reflects cautious optimism, with potential rate cuts on the horizon if inflation remains controlled and economic growth weakens further. The average hourly wage for permanent employees saw a 3.5 percent increase in July, signaling some positive momentum in wage growth amidst the job losses.