New report predicts major job losses in Ontario over US trade war

National Observer

01-05-2025

Ontario's auto industry, a vital pillar of the province's economy, risks losing thousands of jobs this year due to the US trade war, according to a new report from Ontario's Financial Accountability Office (FAO).
The non-partisan watchdog, which provides independent financial and economic analysis to the Ontario Legislature, released its findings Wednesday. It warns that US tariffs — and Canada's retaliatory measures based on trade actions announced on April 17 — could cause up to 68,100 job losses in 2025.
That figure could rise to 119,200 jobs lost in 2026 and 137,900 by 2029 if trade restrictions remain in place, with tariffs on steel, aluminum, vehicles and auto parts placing significant strain on the manufacturing industry. Among the hardest-hit areas would be Windsor, Guelph, Brantford and the Waterloo Region — all of which are heavily dependent on automotive production and exports.
'The actual impact of tariffs on Ontario's economy is uncertain and will depend on the magnitude and breadth of tariff coverage, as well as how businesses, households and economies respond,' the report reads.
If tariffs are reduced, the economic impact on Ontario would likely be less severe. However, the report warns that additional or higher US tariffs could push the province into a deeper recession than currently projected.
Peter Frise, a professor of automotive engineering at the University of Windsor, described the findings as 'very concerning,' and says the auto sector is a critical part of Ontario's manufacturing economy. 'Employment in this sector is extremely important across southwestern Ontario — anywhere from Oshawa to Windsor,' Frise said. 'It's a very significant part of the provincial economy, so anything that disrupts the auto sector is a very serious problem.'
Frise warned that the integrated nature of North America's auto industry means no single region is immune. 'There's no separating parts from assembly. It's all one system.'
Among the hardest-hit areas would be Windsor, Guelph, Brantford and the Waterloo Region — all of which are heavily dependent on automotive production and exports.
In a press conference, Ontario Premier Doug Ford rejected the recession prediction, saying 'no one can predict the future.'
'The tariffs will hurt absolutely, but I have confidence that we'll work things out with the United States and President Trump,' Ford said. 'We have a newly elected federal government. I'm sure the prime minister will be going down there to talk to President Trump. The only thing we will accept is zero tariffs.'
Ford said the deeply integrated supply chain means tariffs would harm both Canadians and Americans.
He previously warned that up to 500,000 Ontario jobs could be lost if American tariffs are applied to Ontario's export market.
Tariff chaos'
Ontario's economy is vulnerable to US tariffs, given that 85 per cent of its exports go to the US, and the province's auto sector is a key contributor, accounting for $36 billion of the $220.5 billion total. Last year alone, Ontario produced 1.54 million vehicles, most of them destined for American consumers.
David Adams, president and CEO of Global Automakers of Canada, says the FAO's findings reflect a growing concern within the industry, particularly in communities where automotive jobs anchor the local economy.
'It seems like all of the towns and cities that are most adversely impacted by the tariff situation are towns that have a big automotive presence,' Adams said.
Workers have every reason to be worried, he added. 'The current tariff chaos has to be on the minds of anybody really affiliated with the automotive sector in Canada at this point.'
Adams said he hopes for a more focused diplomatic effort now that the election is over. 'I think that's really got to be job one for the prime minister — engaging with President Trump in a more formal way … on how to find an off-ramp to these tariffs and how to address any trade concerns or issues in a more traditional way.'
Adams told Canada's National Observer that Canadians seem to have chosen a leader they believe can better manage the relationship with the US, adding that Carney appeared better equipped to handle negotiations with Trump moving forward.
Frise also agreed that Canada's new government brings hope for a diplomatic solution. 'There's always a path to resolve these problems — it's ultimately a question of US policy,' he said. 'Our prime minister now understands how industry works and may be better placed to counter some of these unwise policies coming from Washington.'
Ripple effects
The report underscores Ontario's dependence on trade with the US as more than 933,000 Ontarians work jobs that depend in some part on US exports.
According to the report, the real impact of tariffs depends on their scope and duration — as well as how businesses, consumers and governments respond. A rollback of tariffs could moderate the damage, but escalation would likely deepen the downturn.
Ontario has historically run trade deficits with the US — averaging $8 billion annually from 2013 to 2024, with a $4-billion deficit recorded last year.
Frise warned that the auto sector's struggles could quickly ripple through the broader economy.
'Each assembly job supports eight or 10 other jobs,' he said. 'If auto workers aren't getting paid, they're not spending money at restaurants, retail stores, or local businesses. The effects will be felt everywhere.'
Sheldon Williamson, a professor at Ontario Tech University, says to mitigate these risks, both the federal and provincial governments need to adopt a proactive approach.
'This includes advocating for stable trade relations with the US, investing in critical infrastructure and technologies to support EV manufacturing and providing targeted incentives to retain and attract automakers,' Williamson said. 'Supporting workforce retraining programs and strengthening ties with alternative markets — such as the EU or Indo-Pacific — could also help diversify Ontario's auto export base and reduce dependence on the US.'