Says vast majority of employees will be affected by Trump ripple effect
Donald Trump’s threat to slap a 25% tariff on Canadian exports sent shockwaves through the Canadian economy, prompting one leading academic to warn this could spark layoffs, especially in middle management.
The president-elect’s proposal, revealed on his Truth Social platform, will make imported goods more expensive for US businesses and subsequently consumers, with the aim of bolstering demand for locally produced alternatives. The ripple effects will severely impact Canadian industries that rely on exports to their southern neighbour, threatening jobs in certain sectors.
Nita Chhinzer, an associate professor of leadership and organizational management at the University of Guelph, said that initial layoffs would be most likely in auto manufacturing but that some industries will likely prove more robust. Energy products, forestry goods, and minerals, for example, are difficult to replace with American alternatives because of established systems, technologies, and skilled labour.
However, sectors like consumer goods and industrial machinery may face a decline in demand for their products.
Drawing parallels to the corporate restructuring of the 1980s, Chhinzer emphasizes that middle management positions might bear the brunt of cost-cutting measures.
“What they found in the 1980s was that we still need the frontline workers to bring in revenue,” she said. “The people in the middle were at the highest risk. I think that’s where the risk lies—not with the frontline workers but with middle management.”
The inflationary pressure created by the proposed tariffs, coupled with stagnant wage growth, paints a bleak picture for Canadian workers.
“Wages have been relatively flat for the last five years, and if inflation gets higher, people might have to engage in additional work to cover their base expenses. We’ve already seen a proliferation of multiple job holders and gig economy workers, and that trend might accelerate,” Chhinzer said.
The rise of gig work, while offering some financial relief, also exposes workers to precarious conditions. These jobs often lack the protections and benefits of traditional employment, leaving individuals more vulnerable to economic fluctuations.
“These are not necessarily the highly desirable jobs, but these are the jobs people are going to have to do to make ends meet,” she said.
In addition, businesses are likely to double down on automation and technology to cut costs. While manufacturing has already embraced significant automation, other areas like shipping and packaging are increasingly following suit.
The cumulative effect of these strategies—tariffs, automation, and wage stagnation—could significantly strain Canadian workers. Rising living costs paired with flat incomes might drive many to take on multiple jobs, further eroding work-life balance and financial security.
“We’re already highly stressed as a society,” Chhinzer said. “If people are feeling even more financial strain and getting multiple jobs, that might exacerbate the decline of the family, the decline of people’s perception that they could buy a house and be financially independent.”
The implications of these tariffs stretch beyond the immediate economic impacts, touching on societal and personal dimensions. Whether through job losses, wage pressures, or shifts in trade dynamics, the fallout from these policies is likely to be felt across all levels of the Canadian workforce. As businesses and employees brace for the potential changes, the need for strategic adaptation is critical.
As businesses brace for the potential fallout of the proposed tariffs, employers must carefully navigate this uncertain terrain to minimize disruptions and maintain workforce stability. According to Chhinzer, a consistent and empathetic communication strategy is critical during periods of uncertainty, with direct managers playing a vital role in this process.
Employers should equip managers with clear, accurate information and hold them accountable for conveying the company’s message with empathy and understanding. This two-way communication should also enable managers to relay employee concerns back to leadership, fostering trust and engagement across all levels of the organization.
“Even employees who are not being affected might be looking to their direct managers for information,” she said. “We have to ensure that those managers are getting the right information and are being held accountable for sharing that information in a timely and accurate manner.”
Additionally, Chhinzer urges employers to consider alternatives that preserve talent while offering flexibility to adapt when conditions improve. These measures not only mitigate the immediate impact on employees but also enable organizations to retain skilled workers who are crucial for recovery and future growth.
“Alternatives to layoffs can include hiring freezes, extra vacation time, unpaid sabbaticals, or reduction in hours. The government also has great programs around job sharing. Get involved with alternatives to layoffs before you execute layoffs,” she said. “A layoff is much more permanent than these alternatives, it doesn’t give you the flexibility to scale back up when demand comes back.”
While cutting labour costs may seem like a natural response, organizations must tread carefully to avoid alienating their workforce. Talented employees, who are often the most marketable, may leave for competitors or entirely different industries if they feel undervalued.
“The last thing you would want to do is take an already exhausted workforce that feels undervalued and try to squeeze more out of them,” Chhinzer said. “Your talented employees will be the ones to leave first; they are market ready, and they’ll share their ideas with competitors or skip industries altogether.”
