Trump Tariffs Canada: Layoffs, Severance & Employee Rights (2026)

The Canada-US trade war has escalated again — and thousands of Canadian jobs could be affected.

New 50% US tariffs on a range of Canadian goods are now in effect following another breakdown in trade talks. An economic analysis estimates that approximately 87,000 jobs in Canada could be at risk if the tariffs remain in place, reports CBC News.

For employees, the important thing to remember is simple: tariffs and economic uncertainty do not take away your workplace rights.

If you are laid off, fired, temporarily laid off or your employer significantly changes your job because of the trade war, you could be entitled to compensation.

Latest Update: 87,000 Canadian Jobs Could Be at Risk

The new 50% U.S. tariffs affect approximately $28 billion worth of Canadian exports.

University of Calgary economist Trevor Tombe estimates in an online post that the tariffs could put approximately:

• 52,000 jobs directly at risk in affected industries
• Plus another 35,000 jobs indirectly at risk at suppliers and businesses that support those industries.

That means approximately 87,000 Canadian jobs could ultimately be affected if the tariffs remain in place.

BMO has also estimated that the new tariffs could reduce Canada’s economic growth by approximately half a percentage point.

For a broader look at companies currently reducing their workforces, visit our Layoffs in Canada page.

Which Provinces Could See the Most Tariff-Related Job Losses?

The impact won’t be spread evenly across the country.

Ontario and Quebec are particularly exposed because of their large manufacturing sectors.

BC could also face significant pressure because of its reliance on exports such as wood and paper products.

Other provinces could still experience job losses as reduced manufacturing and exports affect trucking, suppliers, professional services and other businesses across Canada.

Which Canadian Industries Are Most at Risk?

The industries facing some of the greatest exposure include electronics and electrical equipment, plastics and rubber, machinery, furniture, paper products and wood products.

The effects can also extend well beyond companies that directly export goods to the US.

A manufacturer producing fewer products may need fewer workers. That can reduce demand for trucking companies, suppliers, bookkeeping services and other businesses that depend on that manufacturer.

Small and medium-sized businesses could be particularly vulnerable if the US represents a significant portion of their customer base.

Can My Employer Lay Me Off Because of US Tariffs?

An employer experiencing financial problems can permanently eliminate jobs.

However, if you are a non-unionized employee, losing your job because of tariffs does not mean you lose your right to severance.

Depending on factors such as your age, position and length of employment, you could be owed as much as 24 months’ pay.

Before accepting a severance offer, have it reviewed by an employment lawyer.

Learn more about severance pay in Canada.

What If My Employer Temporarily Lays Me Off?

A temporary layoff is different from a permanent termination.

For many non-unionized employees, an employer can’t simply put you on a temporary layoff without your agreement or the right to do so under your employment contract.

If your company tells you to stay home without pay until business improves, don’t assume that you have to accept it.

A temporary layoff could amount to a constructive dismissal, allowing you to treat your employment as terminated and pursue severance.

Learn more about temporary layoffs and employee rights.

Can My Employer Cut My Pay or Hours Because of Tariffs?

Economic pressure doesn’t give an employer unlimited power to change your job.

A significant reduction in your pay, hours, duties or position could amount to a constructive dismissal if you haven’t agreed to the change.

Don’t resign before getting legal advice. Leaving immediately can affect your ability to pursue compensation.

Fired Because of Tariffs? What You Should Do

If your employer says tariffs, falling sales or economic conditions have forced it to eliminate your job:

1. Don’t sign your severance offer immediately. Your employer’s deadline doesn’t necessarily determine how long you have to pursue your legal rights.
2. Keep your documents. Save your employment contract, termination letter, severance offer, pay information and relevant emails.
3. Check your severance. Use our free Severance Pay Calculator to get an idea of what you could be owed.
4. Get legal advice before accepting the offer. Many employees are offered substantially less severance than they are legally entitled to.
5. Start looking for another job. A reasonable job search is generally important after termination and can also help you get back to work sooner.

Does My Employer Still Owe Severance If Business Is Bad?

Yes.

Financial difficulties, falling sales or U.S. tariffs don’t erase an employer’s obligation to provide proper severance when a non-unionized employee is terminated without cause.

The company’s reason for downsizing doesn’t determine how much severance you are owed.

Your severance is based primarily on factors relating to you and your employment, including your age, position and length of service.

Can My Employer Fire Me Because of the Trade War?

Generally, an employer can eliminate a non-unionized employee’s position because of economic conditions.

But the company must provide the employee with the appropriate amount of severance, and the termination can’t be discriminatory.

This is generally known as a termination without cause.

What Happens to EI If I Receive Severance?

If you lose your job, you should generally apply for Employment Insurance even if you are receiving severance.

Your severance package and EI benefits can interact, so don’t assume that receiving severance means you shouldn’t apply.

Read our guide to EI and severance pay in Canada.

What If I’m Unionized?

Unionized employees must deal with layoffs, termination and severance through their union and collective agreement.

Speak with your union representative about your options.

Samfiru Tumarkin LLP represents non-unionized employees and can’t assist unionized workers with these matters.

Tariffs Don’t Reduce Your Employment Rights

The Canada-US trade war could continue to put pressure on Canadian employers and lead to additional layoffs, temporary layoffs and workplace changes.

But economic uncertainty doesn’t suspend employment law.

If your employer has:

fired you, temporarily laid you off, reduced your pay or hours, changed your job significantly, or offered you a severance package, speak with an employment lawyer before making a decision.

Samfiru Tumarkin LLP helps non-unionized employees in Ontario, Alberta and BC understand their rights and secure the compensation they are owed.

Call 1-855-821-5900 or contact us online to speak with a member of our team.