OTTAWA, ON – The Canadian Labour Congress (CLC) is demanding immediate action from the federal government to protect workers and defend jobs as an escalated trade war—fueled by U.S. President Donald Trump—threatens Canada’s economy. Just today, Trump announced yet another round of retaliatory tariffs on steel and aluminum, this time in response to Ontario’s energy surcharge.
“This is spiraling out of control, and workers across Canada are rightfully alarmed. They are looking to their government for urgent and concrete measures to shield them from job losses and economic uncertainty,” said Bea Bruske, President of the CLC.
Canada’s unions have sent a letter to Prime Minister Designate Mark Carney, pressing him and his incoming cabinet to take immediate steps to strengthen Employment Insurance (EI), particularly for high earners who are now at risk of layoffs. The federal government has yet to fully utilize its authority under the EI Act, which grants it the power to launch pilot programs and allocate emergency funding through the EI Commission.
While the newly announced $6 billion aid package and EI reforms provide some short-term relief, they fall far short of the long-term security workers and communities desperately need. This is a moment for bold leadership—workers cannot afford hesitation or half-measures.
“Canadian workers are under attack in an unprecedented economic trade war, and the government’s response simply does not go far enough,” added Bruske. “We need more than band-aid solutions. We need a comprehensive strategy to ensures no worker is left behind. The government must take decisive action, including imposing export taxes on Canadian energy, to demonstrate Canada will stand firm in defending its industries and workforce.”
The letter outlines key priorities to support workers and strengthen the economy, including:
- Expanding and strengthening Employment Insurance (EI): Ensuring EI benefits are more accessible and adequate for all workers.
- Taking action to preserve good jobs: Implementing industrial strategies to protect Canadian industries and their workers from economic shocks and global instability.
- Investing in Canada’s domestic economy: Supporting economic diversification, manufacturing, and sustainable industries to create stable, well-paying jobs.
- Protecting and strengthening public services: Ensuring public services remain strong and publicly funded to support all Canadians.
“This trade war has exposed serious vulnerabilities in our economy, and it’s workers who are bearing the brunt of the impact,” Bruske added. “The government must move beyond stopgap measures and commit to real investments to safeguard livelihoods and build a resilient future.”
The Canadian Labour Congress urges the federal government to work closely with unions and labour organizations to develop a solid plan prioritizing workers, securing jobs, and strengthening communities. Canada’s economic recovery depends on it.
Meanwhile, on the same day, U.S. investors appeared less concerned about the trade war, buying US$3.5 billion worth of bonds from the Canadian government at typical valuations. Canada sold five-year notes at a yield of 0.11 percentage points (11 basis points) above US Treasuries. A year ago, Canada had sold $3 billion of five-year notes at 10 basis points above Treasuries.
This pricing indicates investors are closely monitoring the US-Canada trade war without necessarily predicting it will severely impact Canada’s finances.
According to Dominique Lapointe, senior director of macro strategy at Manulife Investment Management, even if Canada faces moderate economic slowdown, its debt-to-gross domestic product ratio would remain among the lowest within the G-7 group. “There is still fiscal space to absorb a slowdown, and investors should not be wary of Canada’s credit worthiness at the moment,” he said.
Canada recently appointed Mark Carney to replace Justin Trudeau as the leader of the Liberal Party, but with upcoming elections, the government has yet to release plans for its federal budget, typically due every spring. If provincial budgets are any indication, Canada might grapple with greater deficits and increasing funding requirements.
The U.S. tariffs pose risks of plunging the Canadian economy toward recession and could adversely affect specific sectors, such as car manufacturing, mining, and agriculture, contributing to wider corporate bond spreads within Canada.
Despite these challenges, Canada maintains top credit ratings from S&P Global Ratings and Moody’s Ratings since 2002, holding the second-highest rating from Fitch Ratings as well. Comparatively, the U.S. has the second-highest rating at S&P and Fitch, holding the highest rating at Moody’s.
With the Canadian Labour Congress calling for decisive measures and the bond market responding cautiously optimistic, the government faces significant pressures to support its workforce amid volatile economic challenges. The potential for both immediate responses to the trade situation and long-term strategies will be instrumental as Canada navigates through these turbulent economic waters.