Canada's Job Growth Collapses as Tariff War Deepens Economic Pressure

Canada's labour market deteriorated sharply in September 2026 as hiring fell to just 29,000 jobs, a stark reversal from summer momentum. The slowdown is largely driven by the ongoing trade war with the United States, which has imposed tariffs on Canadian goods and prompted Ottawa to retaliate with counter-tariffs on nearly $28 billion worth of American products.

Economic Impacts

Deloitte forecasts Canadian exports will keep shrinking through year-end as tariffs bite, with sectors and provinces facing the steepest hit and exports declining through year-end weighing on economic growth and jobs. The OECD's September outlook forecasts Canadian real GDP growth of 0.9 per cent in 2026, strengthening to 1.3 per cent in 2027, while the U.S. is expected to grow 2.2 per cent this year. Investment tied to artificial intelligence and data centres has provided some momentum, while new U.S. tariffs and broader uncertainty around North American trade are creating fresh pressure.

Over 25,000 Canadian businesses are estimated to operate in sectors covered by new tariff measures, with approximately 5,500 exporting to the United States, and smaller firms account for more than two out of every five businesses identified as directly exposed.

For newcomers and job seekers arriving in Canada, labour market tightness has eased, meaning more positions may be available but competition is intensifying. If you have a job offer, confirm the employer's stability and export exposure. Skilled trades and tech sectors (AI, data centres) are among the most resilient areas; tariff-exposed manufacturing and export-oriented sectors carry higher risk.

Sources

• Deloitte — Canada's exports will shrink through year-end as trade war weighs on growth
• OECD — Canada Economic Snapshot, September 2026