With all of the noise of back-to-back provincial and federal election campaigns, you would be forgiven for not listening to the cracking sounds coming from Ontario’s fragile economic system since January, even earlier than U.S. President Donald Trump’s tariffs started to chunk.
- The unemployment charge within the province was 7.6 per cent in January, 7.3 per cent in February and seven.5 per cent in March, Statistics Canada reported. The one province with a better unemployment charge proper now could be Newfoundland and Labrador.
- Ontario’s actual GDP grew by simply 1.2 per cent in 2024, Statistics Canada reported. The one provincial economic system that grew extra slowly final yr was Manitoba’s.
- Solely 15 per cent of companies felt assured within the province’s economic system in February, down from 26 per cent in December, based on a survey for the Ontario Chamber of Commerce.
All of it paints an image of an economic system that was already relatively feeble, simply as Trump’s tariffs seem poised to kneecap Ontario’s export-oriented industries.
Daniel Tisch, president and CEO of the Ontario Chamber of Commerce, says roughly two-thirds of its enterprise members anticipate to be affected negatively by U.S. tariffs.
“There’s numerous nervousness, there’s numerous concern,” Tisch stated in an interview. “You see them [businesses] deferring selections to increase, to speculate and to rent folks, none of that are good issues.”
The Chamber highlighted this vulnerability in February in its 2025 economic report, with the picture of a “FRAGILE” sticker slapped on its cowl saying, “Ontario Financial system: Deal with With Care.”
“As we ended 2024, there have been some encouraging indicators, in that shopper confidence was rising, as was shopper spending, we noticed rates of interest and inflation coming down,” stated Tisch.
Financial turnaround ‘snuffed out’
“We had been starting to see a turnaround, however it’s like a candle has been snuffed out,” he added.
Again within the fall, the 2025 economic growth forecasts for Ontario averaged 1.8 per cent.
The large banks have now slashed these forecasts, with TD predicting actual GDP development of 1 per cent, RBC forecasting 1.2 per cent and Scotiabank expecting 1.3 per cent development.
In the meantime, the province’s unbiased Monetary Accountability Workplace predicted final week that U.S. tariffs and Canada’s retaliation may end in some 119,000 fewer jobs in Ontario by next year, pushing unemployment upward by one other 1.1 proportion factors.
Whereas Premier Doug Ford has been vocal in regards to the future threats that tariffs pose to jobs and the economic system on this province, he is been far quieter in regards to the tepid development and rising unemployment figures that predate Trump’s re-election.
At a information convention final week, CBC Information requested Ford to clarify why Ontario’s unemployment charge is so excessive.
Unemployment charge hits 2014 ranges
“The tariffs are a serious, main issue,” Ford responded, ignoring the truth that unemployment has risen steadily for the previous two years.
“However let’s speak about since we have been elected,” Ford continued. “There’s over a million extra folks working immediately than there was seven years in the past as a result of we have created the local weather and situations for corporations to return right here and make investments.”
Ford’s determine in regards to the enhance since 2018 within the variety of Ontarians working is correct, however it ignores the even larger development within the inhabitants of would-be employees over the identical interval.
Statistics Canada figures present 7.2 million folks employed in June 2018, when Ford’s PCs had been first elected, rising to eight.2 million in March of this yr. The dimensions of the labour power was 7.7 million in June 2018 and rose to eight.9 million by March. (StatsCan’s jobs report for April is popping out on Friday.)
If Ford had been to match unemployment charges as an alternative of job numbers, the image wouldn’t look so rosy. When he first grew to become premier, Ontario’s unemployment charge was 5.9 per cent. It is presently sitting at 7.5 per cent.
One other manner to have a look at it: The unemployment charge in Ontario has now exceeded seven per cent for eight consecutive months. Aside from the worst of the pandemic, the final time that occurred on this province was 2014, manner again when Kathleen Wynne was premier and main her Liberals to a majority election win.
Why was Ontario’s economic system sluggish earlier than tariffs?
Armine Yalnizyan, an economist and the Atkinson Fellow on the Way forward for Staff, sees three key elements behind Ontario’s financial sluggishness that each one pre-date tariffs.
She factors to a decline within the tech sector, notably in terms of shedding jobs; the profound slowdown in development, with rates of interest suppressing folks’s potential to purchase houses; and final yr’s drop in immigration numbers, a swap from how speedy inhabitants had beforehand helped gasoline Ontario’s financial development.
Yalnizyan is anxious about how layoffs in trade-exposed sectors such because the auto business will ripple by the economic system.
“As these folks lose their jobs, they cease going out for dinner, they cease hanging out at bars and eating places. And so consequently, the cascade impact into the hospitality sector might be very massive,” Yalnizyan stated in an interview.
A brand new report from Ontario’s Monetary Accountability Workplace exhibits the potential impression of Donald Trump’s tariffs on the province, together with potential unemployment and affordability.
Brian Lewis, the province’s former chief economist, now a senior fellow on the Munk College, says general financial development has been dampened in most western economies by central banks conserving rates of interest excessive to rein in inflation.
“We had been lastly beginning to see some mild on the finish of the high-interest-rate tunnel, inflation being introduced down,” stated Lewis in an interview.
Ontario funds coming Might 15
“Fourth quarter (of 2024) development in Ontario was one of the best quarter shortly. It regarded like issues had been going to be fairly good. However now we have now this tariff concern thrown at us, and that is actually modified folks’s perspective,” Lewis stated.
Whereas the financial outlook for Ontario beneath Trump tariffs appears typically dismal, Lewis says federal and provincial authorities help for affected employees and companies can soften the blow.
“Additionally, what are they going to do in the long term to reshape our financial composition and make our financial relationships much less susceptible?” he stated. “I feel that is going to be one thing to actually stay up for in what I anticipate to be a few actually fascinating authorities budgets over the following few months.”
The provincial funds is because of be tabled on Might 15. The re-elected federal Liberals haven’t introduced a funds date.
The big-ticket tariff response measures from the Ford authorities thus far embrace a six-month deferral of about $9 billion in provincially administered enterprise taxes and rebating $2 billion of Office Security and Insurance coverage Board premiums to employers.
The federal government has additionally tabled laws to chop down interprovincial trade barriers and velocity up approvals of mines and different useful resource tasks.
Each Yalnizyan and Tisch see different methods the provincial authorities might help.
“The excellent news is that there’s a lot that provincial governments can do, and there is a lot that Ontario is doing proper now,” stated Tisch, the chamber of commerce CEO.
He says he needs to see a complete assessment of taxation and laws, in addition to a lift to post-secondary funding “to higher align the submit secondary schooling system with the wants of the labour power.”
Yalnizyan says she needs the federal government to give attention to conserving down the prices of fundamentals, resembling housing and baby care.
She says the federal government has floated some “very unusual” concepts about defending Ontario’s economic system, resembling framing Ford’s thought of a tunnel beneath the 401 as a response to the tariffs.
“We’re not seeing a sign that they are being very critical about making life extra reasonably priced on the fundamentals, stated Yalnizyan. “A $200 cheque just before the election is not going to chop it in a commerce struggle.”
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