Ontario has lost tens of thousands of manufacturing jobs since early 2025 as US tariffs on autos and steel bite, and the fallout is reshaping North American trade.
The dispute dates to President Donald Trump's return to the White House and an expansive tariff campaign. Washington has targeted Canadian steel, aluminium, lumber and autos, and last week added a 50% levy on about C$28bn ($20bn; £15bn) of Canadian goods. Ottawa responded with what it called dollar-for-dollar and strategic counter-tariffs, placing duties on C$28bn of US products including steel, furniture, cosmetics and toilet paper.
The economic pain is uneven. Ontario, the country's most populous and manufacturing-heavy province, has borne the brunt of auto and steel measures, with several plants announcing layoffs and production cuts. Quebec's metal sector saw exports fall 36% between February 2025 and 2026, accompanied by a 3.6% drop in employment in that industry, data released in July show. The Royal Bank of Canada identifies Ontario and Quebec as the provinces most exposed to sectoral US levies, while Newfoundland and Labrador, New Brunswick, Alberta, Saskatchewan and Prince Edward Island are least exposed.
The Canadian retaliation will also wound pockets of the US economy. Statistics Canada data indicate Ohio faces C$3.2bn, or 12%, of its exports being tariffed by Canada, followed by Illinois and Pennsylvania. Ohio stands to feel tariffs on steel and laundry machines, while Illinois will be hit by duties on farm and construction equipment, a sector dominated locally by John Deere. Derek Holt of Scotiabank said Canada's retaliatory list appears to be "very deliberately oriented" toward swing states that could influence upcoming midterm elections.
On average tariff exposure, Ottawa's situation has worsened. The Royal Bank of Canada reported the US effective tariff rate on Canada rose from 2.9% in June to 5.7% after the latest measures, overtaking Mexico and approaching the US rate on the UK at 6.2%. China remains far higher, at about 20.5%.
Businesses are adapting unevenly. Bank of Canada figures show Canadian firms have increased exports outside the US since January 2025, and Prime Minister Carney has pledged to double non-US exports over the next decade. Some exporters, like Matteo Sgaramella of Toronto menswear brand Outclass, say European buyers have been receptive, "The reception has been amazing," adding, "We're kind of seen as the one country that's kind of standing up to the Americans right now." Other firms, particularly in Ontario regions closely integrated with US supply chains, find diversification difficult.
With no resolution in sight, the tariff battle will continue to redistribute economic pain across provinces and into select US states while accelerating efforts by Canadian businesses and Ottawa to reroute trade away from the United States.
