American tariffs have reshaped Canada’s manufacturing sector, but labour-market impacts have not been evenly shared across workers.

The United States imposed tariffs on Canadian steel, aluminum, automobiles and auto parts as part of a broader protectionist push under Donald Trump’s administration. Canada’s government responded with its own counter-tariffs and trade measures, but disruptions to the industry were already underway by that point.

Manufacturing is a major source of employment for both immigrant and Canadian-born workers. It includes everything from automotive and aerospace parts to food processing and steel products, and it contributes roughly 10 per cent of Canada’s GDP.

Manufacturing is particularly vulnerable to U.S. tariffs because of its deep integration with cross-border supply chains. More than 60 per cent of Canada’s manufacturing sector has substantial trade exposure to the U.S., making it the primary channel through which tariffs affect the Canadian economy.

As firms adjusted to rising costs and trade uncertainty, immigrant and Canadian-born workers experienced different forms of employment risk at different points in 2025.

A sector under strain

A recent report shows that between January and September 2025, Canada’s manufacturing sector experienced lower production, fewer jobs and higher prices.

After momentum earlier in the year, manufacturing jobs fell sharply in the spring, with the largest consecutive job losses occurring in April, when 30,600 jobs were lost, and May, when a further 12,200 jobs disappeared. Overall, employment fell by nearly 43,000 workers between March and May.

Monthly employment levels in Canada’s manufacturing sector throughout 2025. (Labour Force Survey, 2025)

This was followed by persistent instability rather than sustained recovery later in the year. Employment rebounded in September, with 27,800 jobs gained, and rose again in October, but these gains were partially reversed in November, when 9,300 jobs were lost.

Firms responded to the tariff shocks through delayed and incremental employment cuts, but these sector-wide adjustments were experienced differently by immigrant and Canadian-born workers.

Immigrant workers are more vulnerable

Not all workers felt the shocks from the labour market equally. Immigrant workers were disproportionately affected by tariff-related employment adjustments and are particularly vulnerable when manufacturing employment becomes unstable.

Manufacturing is a critical source of employment for immigrants, particularly in large metropolitan regions and along industrial corridors.

In March 2025, immigrants accounted for 30 per cent of employment in Canada’s manufacturing sector, compared with 70 per cent of Canadian-born workers. By December 2025, however, the immigrant share had declined to 28 per cent, while the share of Canadian-born workers increased to 72 per cent.

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• ** Read more: Canadian immigrants are overqualified and underemployed — reforms must address this ** *

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This disparity was compounded by a structural educational mismatch. While 80 per cent of workers in the sector don’t have a university degree, immigrant workers were more than twice as likely as Canadian-born workers to be university educated.

Nevertheless, these higher education levels often do not translate into higher-paid roles within manufacturing.

Lower wages amplify employment risk

Wage data shows that many immigrant manufacturing workers are concentrated in lower-paid or more labour-intensive jobs that are particularly vulnerable during an economic downturn.

Throughout 2025, immigrant workers earned roughly $2.50 to $3 less per hour than Canadian-born workers. This gap did not narrow even when wages recovered later in the year.

Quarterly average hourly wages in Canada’s manufacturing sector by immigration status in 2025. (Labour Force Survey, 2025)

Average hourly wages for all workers increased from $34.43 in March to $35.29 in December. Yet the wage gap for immigrant workers widened slightly — from $2.52 to $2.56.

Lower pay combined with higher educational attainment points to persistent credential under-utilization, meaning workers possess skills or qualifications that are not fully used or rewarded in their jobs. This under-utilization increases immigrant workers’ exposure to employment instability when trade disruptions occur.

How job loss patterns shifted

Job loss also unfolded differently over time. In the first half of 2025, unemployed former workers who were immigrants were more likely to report layoffs — temporary or permanent — as the cause of their joblessness.

That share remained consistently high — at 66 per cent in June — before gradually declining later in the year. By December, 51 per cent of immigrant former workers reported job loss as the reason for unemployment.

The share of unemployed former manufacturing workers who reported temporary or permanent job loss as the reason for unemployment, by immigration status. (Labour Force Survey, 2025)

In contrast, job loss became increasingly concentrated among Canadian-born workers in the second half of the year. In March, only 53 per cent reported job loss as the reason for unemployment. This share rose steadily throughout the rest of the year, reaching 71 per cent by December.

These trends indicate that firms initially relied more heavily on reductions in immigrant labour, and later expanded layoffs to include Canadian-born workers as tariff pressures persisted.

Differential adjustment strategies

U.S. tariffs reshaped Canadian manufacturing not through a single employment shock, but through different labour-adjustment strategies over time.

Highly educated immigrant workers, many of whom were concentrated in lower-paid roles, were more exposed to early layoffs, wage penalties and unstable employment. As tariff pressures deepened, job loss became more concentrated among Canadian-born workers as longer-term restructuring took place.

These patterns matter for policy. If manufacturing is to remain a viable pillar of the Canadian economy in an era of trade disruption, policy responses must recognize these unequal adjustment patterns and address the underlying vulnerabilities that leave some workers more exposed than others.

This could include targeted income supports and rapid-response training for displaced workers, and tailored settlement and employment services for immigrant workers who, as a group, are concentrated in lower-wage and more unstable jobs.

In addition, better co-ordination between trade, industrial, and immigration policies could help ensure that adjustment costs are not disproportionately borne by already vulnerable workers.