Trade War Layoffs & Legal Rights: How Will Incoming Tariffs Affect Jobs in Canada

President Elect Donald Trump has announced that when he assumes office, he will impose a 25% tariff on all Canadian goods. Therefore it is important to be prepared for a possible Tariff war with the United States, job losses in Canada due to tariffs, and how it will affect you. At Share Lawyers we have looked into this issue, and we are here to provide you with information on what could happen and provide free legal consultations toCanadians needing support with trade war layoffs and legal rights.

What are Tariffs

A tariff is a tax on goods imported into a country. The economic effect of taxes on imported goods is that the price of those goods will increase in most cases by the same amount as the tax. The reason for this is that producers will typically pass on the taxes directly to consumers. Thus, the goods from foreign countries become less competitively priced in the foreign market resulting in a reduced demand for those said goods. This in turn results in less production of those goods from the market in which they are produced. The reduction in production has run-on economic effects which lead to a general decline in the exporting countries' economic output.

Effect of Tariffs on the Canadian Economy

Canada exports $438 billion worth of goods to the United States which represents 76.88% of all goods we export. The effect of Trump’s tariffs on the Canadian economy has been calculated by multiple economists to increase inflation to 7.1% and result in real GDP declining up to and beyond 2.4% leading to Canada entering a deep recession. The effect on unemployment would be a loss of upwards of 1.5 million jobs and 7% unemployment. Possible retaliatory measures taken by Canada would result in a massive increase in the price of goods imported increasing inflation and increasing the likelihood of even higher American tariffs. Layoffs will occur in certain sectors more than others including Agriculture, Manufacturing, Technology and Forestry however there will be job losses in all sectors of the Canadian economy.

United States-Mexico-Canada Agreement (USMCA formerly NAFTA)

The USMCA which replaced NAFTA does not come up for review until July 1, 2026. Some have speculated that the Trump administration will not impose Tariffs until this date as any newly imposed Tariffs before July 1, 2026, would violate the agreement and international law. However, President-elect Trump has stated that “On January 20th, as one of my many first Executive Orders, I will sign all necessary documents to charge Mexico and Canada a 25% Tariff on ALL products coming into the United States”. Thus, it is reasonable to assume that international agreements will not prevent the United States from enacting tariffs.

What Can You Do if You Face Layoffs?

Employees should know their rights if they are laid off due to changing economic conditions or for other reasons. While employees are often entitled to minimum severance and termination pay ensured by the Employment Standards Act (ESA), they are also entitled to Common Law Notice. Common Law Notice tends to be significantly more generous and often employers will not provide the common law notice, and it will require a legal representative to fight for your rights.

Typically, employees are entitled to around 1 month per year of service, but this can be higher if certain factors are activated and there is also often a minimum amount of common law notice that the courts will award.

Factors that are considered in determining your common law notice are your age, length of service, position, and the ability to find new work. In situations where there is an economic downturn, the last factor tends to be more significant and will lead to higher settlements.

If your position has been terminated for any reason reach out to us for a free consultation and we will let you know all of your options.

Contact Share Lawyers today and let our experience work for you. Our 35+ years of experience can help you win your case against your employer. Our legal team offers a free consultation and works on a contingency basis—there are no fees unless you win your case.