U.S. tariffs and Canada’s response could result in 68,100 fewer jobs in Ontario this year, a new report estimates.
This figure may increase to 119,200 jobs in 2026 and 137,900 jobs in 2029, according to the report by the Financial Accountability Office of Ontario (FAO), released Wednesday.
The FAO provides independent financial and economic analysis to the Ontario legislature.
Wednesday’s report compares a tariff scenario based on trade actions announced by the U.S. and Canada as of April 17 against a no tariff scenario.
“The actual impact of tariffs on Ontario’s economy is uncertain and will depend on the magnitude, breadth and duration of tariff coverage, as well as how businesses, households and economies respond,” the report said.
U.S. tariffs are expected to raise Ontario’s unemployment rate by 1.1 per cent from 2025 to 2029, compared to the no tariff scenario, the report said.
The majority of predicted job losses would happen in the manufacturing sector, as well as related supply chain industries, according to the report.
Primary metal industries would be hardest hit by job losses, with 17,700 fewer jobs expected, the report said. That’s followed by motor vehicle parts industries, and machinery and electronics.
Windsor would be the most affected area in the province, as employment is predicted to decrease by 1.6 per cent in 2026, the report said.
The city is followed in order by Guelph, Brantford, the Region of Waterloo and London.
The trade war is also predicted to slow Ontario’s economic growth and raise prices for consumers, the report found.
‘Modest recession’ possible in 2025
The report analyzed the impact of U.S. tariffs on steel, aluminum, automobiles and automobile parts, as well as Canadian reactionary tariffs.
It does not consider U.S. President Donald Trump’s latest partial reversal of his auto tariffs that were announced on Tuesday.
Canada avoided broad-based tariffs from U.S. President Donald Trump this week, but thousands of workers in Windsor, Ont., are already out of work. Windsor Mayor Drew Dilkens estimates his city could see up to 30 per cent unemployment because of U.S. auto tariffs. A quick resolution between Canada and the U.S. is ‘imperative,’ says Dilkens.
The FAO is “still working through” the details of Tuesday’s announcement but it appears to only delay or slowly implement tariffs examined in the report, said Jeffrey Novak, the province’s financial accountability officer.
“If anything, yesterday’s announcement would [in the] short term help things, but in the longer term, be the same as what is in our tariff outlook,” he said, speaking at Queen’s Park on Wednesday.
Under the scenario considered in the report, U.S. tariffs will affect 20 per cent of Ontario’s international exports. Meanwhile, the Canadian government’s retaliatory tariffs will affect 15 per cent of the province’s international exports.
The U.S. is Ontario’s most important trading partner, accounting for most of the province’s international trade, the report said.
As demand for Ontario exports goes down in the U.S., the province’s real GDP growth in 2025 would be 0.6 per cent — less than half the projected growth in the no tariff scenario.
“This implies that a modest recession would occur in 2025,” the report said.
Within manufacturing, the motor vehicle parts industry would be the most impacted, the report said.
Ontario’s economy is expected to adjust to the impact of U.S. tariffs over time, the FAO said. From 2027 to 2029, the province’s real GDP growth would improve to an average of 1.8 per cent, which the report says is “modestly slower” than the no tariff scenario of 1.9 per cent.
Prices for consumers are expected to increase “modestly,” the report said, as Ontario’s Consumer Price Index inflation rate is projected to be 0.2 per cent higher in 2025 and 0.3 per cent higher in 2025, compared to the no tariffs scenario.
