American prices in Canada and Mexico are coming next week, said US President Donald Trump – and the imminent threat hung on millions of jobs.
Economists warn that radical prices of 25% would be “most important commercial shockFor Canada since the 1930s, the job losses expected in several sectors.
“There are many sectors that have a lot of jobs related directly and indirectly to trade with the United States,” said Erik Johnson, economist at BMO Capital Markets
The prices should take effect on March 4, a date on which Trump has repeated several times in recent weeks.
Analysts and economists fear that sustained prices can push Canada into a recession.
“This shock far exceeds the 2018 prices in amplitude, reducing the value of this period as a useful guide for the upcoming economic impact,” said RBC chief economist, Frances Donald and the deputy chief economist Nathan Janzen in a recent report.
“For the context, in 2018, the average American import rate increased from 1.5% to around 3%. Under the new policy, the average American rate rate (increased to almost 11%, the highest average ratio since the 1940s. ”
Addressing members of the Mississauga Board of Trade and the Oakville Chamber of Commerce on Friday, the governor of the Bank of Canada, Tiff Macklem, said that the shock of the prices would be very different from the economic slowdown caused by the pandemic of COVID-19.
“In the pandemic, we had a steep recession followed by a rapid resumption of the reopening of the economy,” said Macklem. “This time, if the prices are durable and wide, there will be no rebound.”
Macklem said that if Canada could recover part of the growth, damage would be durable.
A recent report from the Chamber of Chamber of Canada said that around 2.3 million Canadians endeavored by jobs related directly to US exports, while 1.4 million Americans occupy Canadian export jobs.
All of these jobs are said to be in danger of Trump prices, said the room.
According to the commercial trotter of Canada-US in the Chamber, nearly $ 229 million in goods have already crossed the border since the beginning of 2025, on February 25.
Where could layoffs occur?
While economists agree that the economic blow of prices would be felt across the country, in particular the vulnerable sectors where prices could stimulate dismissals or feel a big blow:
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- Sectors with high dependence on exports to the United States
- Automotive sector
- Construction sector
- Energy sector
- Agriculture
- Consumer goods
When Macklem spoke on Friday, he said that the Canada Bank estimated an export drop of 8.5% in the first year following general prices, Canadian exporters who should react by reducing production and Liming workers.
He said: “With exports to the United States, representing about a quarter of our national income, the shock would be felt across Canada.”
One of them would be the energy sector.
This sector employs around 276,000 people, This goes to 900,000 when you have indirect jobs, according to the regulator of Canada Energy.
“If we focus on global export exposure, the top of the list in Canada would be oil, gas and energy,” said Johnson.
The sector represents around 9.2% of Canada’s GDP, While manufacturing consists About 10% of Canada’s GDP and 1.7 million jobs.
“Manufacturing, in particular automotive manufacturing and energy are the sectors most affected by prices,” said Tu Nguyen, economist at RSM Canada.
“These sectors will be the first to see the layoffs were a wide price on all the goods used, although the damping of the currency can soften the coup to Canadian exports.”
Canada’s automotive industry has also warned that the impact of Trump’s prices would be immediate.
Flavio Volpe, president of the Automotive Parts Manufacturers Association, said that the North American automotive industry could close “in the week” if Trump prices continue on March 4.
According to UniformThe Canada automotive industry directly employed 125,000 workers in 2022, including 37,000 in assembly, 17,000 in truck and trailers’ production and more than 71,000 in the manufacture of parts.
Brian Kingston, Chairman and Chief Executive Officer of the Canadian Vehicle Manufacturers, said: “If you set up prices, which are taxes of scale that are envisaged by the United States, it could Train production stops, job losses and of course, increase in prices for Americans. »»
Volpe said that “hundreds of suppliers and dozens of car manufacturers,” said in meetings that they would refuse to pay Trump’s surcharge, which would lead to grinding industry.
“Everyone agreed that we would close, so it would be immediate,” he said.
Nguyen said that even uncertainty about trade policy could affect the Canadian economy.
“Prices are inflationary and hinder growth. American consumers are retreating on expenses. If a wide price advance, expect slower growth in both countries. Sectors such as agriculture and consumer products are also affected due to the drop in demand from consumers, “she said.
Johnson said that the Canada Construction Sector could also be affected by reprisal rates. While Canada exports large volumes of steel and aluminum to the United States, it is also important certain specialized metal products, such as steel beams, said Johnson.
“For the construction sector, higher costs could lead to deadlines and if these projects remain pending long enough, this would result in job losses,” he said.
The construction sector employs around 1.6 million people in Canada And represents 7.4% of GDP.
Approximately 2.3 million people Work in the agriculture sector in Canadarepresenting around seven% of GDP, while the consumer goods sector represents around 33% of Canada manufacturing GDP and 40% of jobs, According to the Federal Commerce Commissioner.
A report by the Royal Bank of Canada from December said that the impact of job losses would be amplified by the way the two savings are interconnected.
The report added that if the impact of job losses will be felt across the country, different sectors will be affected in different provinces.
“Manufacturing provinces such as Ontario and Quebec would see significant challenges in motor vehicles and parts, metals and aerospace industries. Any impact on the industries exporting energy would be largely concentrated in Alberta, Saskatchewan, New Brunswick, Newfoundland and Labrador, “he said.
Could Canada avoid a recession?
Economists generally define a recession as two consecutive quarters of an economy that contracts.
The RBC report said Canada could avoid a full -fledged recession if the prices are in place for a few weeks.
“Prices deleted in a few weeks are likely to create a temporary stand for Canada. However, if they extend over a few months (for example 3 to 6 months), the risk of recession in Canada increases rapidly, “said the report.
Nguyen said that a weakened Huard could mean that there is a slight money lining for Canada.
“The depreciation of the currency could soften the blow to Canadian exports,” she said.
Nguyen added that “manufacturing experienced a strong month of hiring in January, which indicates that despite the uncertainty of commercial policy, the current demand for goods such as cars and devices remains robust.”
However, Johnson warned the observers not to put the cart in front of the horse.
The prices can still be avoided, he said, adding: “It will be important to see if this is still very focused on the extraction of a kind of additional transaction.”