Stock Market in Canada Concludes Unchanged Due to Job Losses and Tariff Uncertainty
Canadian Economy Faces Challenges Amidst US Tariff War
The Canadian economy is experiencing turbulence as a result of the ongoing tariff war with the US, with employment levels at risk and key market sectors disrupted. In July, employment in Canada fell by 40,800 jobs, following an increase of 83,100 jobs in June, and full-time employment decreased by 51,000, marking the first drop in four months [1].
The unemployment rate remained unchanged from the previous month at 6.9% in July [2]. However, the impact is particularly pronounced in vulnerable provinces, with up to 100,000 job losses possible [1]. Layoffs and shutdowns are expected in key industries such as steel, aluminum, automotive, forestry, energy, aerospace, and mineral processing [1][2][4].
The tariffs on critical exports, including steel, aluminum, lumber, grains, are causing prices to rise both domestically and for US consumers, contributing to inflation and decreasing demand for Canadian goods from US buyers. This situation could lead to a significant loss of Canadian jobs and potentially push Canada into recession within six months [1].
The S&P/TSX Composite Index closed at 27,758.68 on Friday, down by 2.59 points or 0.01% [6]. Major sectors that lost in today's trading were Real Estate (0.04%), Utilities (0.08%), Financials (0.19%), and Consumer Discretionary (1.03%) [7]. On the other hand, sectors like Communication Services (1.40%), Healthcare (1.06%), IT (0.70%), and Consumer Staples (0.65%) gained [8].
The US has escalated tariffs from 25% to 35% on Canadian imports as of August 2025, along with anti-circumvention measures to prevent rerouting of goods, increasing pressure on Canadian sectors and employment [4]. Retaliatory tariffs by Canada have been limited in effectiveness due to the economic interdependence and the risk of further damage to the Canadian economy [5].
This situation underscores Canada’s vulnerability due to deep integration with the US economy and highlights the importance of resolving trade disputes collaboratively while diversifying trade relationships [5].
Meanwhile, other economic indicators also show signs of strain. Part-time employment in Canada increased by 10,300 in July, slowing sharply from a 69,500 jump in June [3]. The labor force participation rate decreased to 65.20% in July [3]. Youth unemployment rose to 14.6% in July [9].
In other news, Christopher Waller has emerged as a top pick for replacing current Fed Chair Jerome Powell, whose term ends in May 2026 [10]. The news about Trump revamping the Fed has triggered rate cut hopes [11]. President Donald Trump has nominated Stephen Miran, the Chairperson of the Council of Economic Advisers, to replace Adriana Kugler on the Federal Reserve board [12].
References:
- CBC News
- Bloomberg
- Global News
- The Globe and Mail
- The Conversation
- Reuters
- Financial Post
- BNN Bloomberg
- Statistics Canada
- Bloomberg
- CNBC
- CNBC
The ongoing tariff war with the US is causing difficulties for the Canadian economy, impacting not only employment levels but also key market sectors such as finance and investing due to a potential loss of jobs and possible recession. As a result, Canadian businesses and the stock-market are experiencing turbulence, with major sectors like Financials and Consumer Discretionary seeing losses in today's trading.
