Canadians struggling to find stable employment or switch jobs may face an uphill battle over the next 12 months as the trade war keeps most businesses stuck in neutral and the job market “subdued.”
A new report from the Bank of Canada shows a large portion of businesses say they are taking a wait-and-see approach rather than investing in growing their operations and hiring new workers.
According to the central bank’s Business Outlook Survey for the third quarter of 2025, most businesses say they expect demand “weakness” for their products and services over the next year, which means many are expected to hold off on hiring new employees.
“Hiring intentions remain subdued. Most firms do not plan to increase the size of their workforce over the next 12 months. Soft demand, ongoing tariff uncertainty and minimal capacity pressures mean few businesses need to add staff,” said the Bank of Canada.
“Businesses no longer expect sales growth to strengthen over the coming year as tariff-related impacts continue to hold back demand. Firms attribute this anticipated weakness largely to broad spillover effects from the trade conflict,” said the Bank of Canada.
Some of these “spillover effects” include weaker spending by customers on services like renovations, corporate travel and events, as well as worries of less consumer spending over the next 12 months as affordability remains a struggle for many, according to the survey report.
The central bank also cited the weak outlook for the housing sector as one of these trade war effects, which has hampered demand for businesses and their services. This may include demand for home renovations and housing developments.
Get daily National news
Get the day’s top news, political, economic, and current affairs headlines, delivered to your inbox once a day.
Tariffs imposed by the United States in particular have meant higher costs for some goods and services, which has led businesses and global economies, including Canada, to seek alternative trading partners.
Wages may also be affected. On top of a tough job market to get into, Canadians who are currently employed may find out their wages and salaries are not going to increase as much as last year.
The Bank of Canada says businesses participating in the third quarter survey expect to increase wages for their workers by 2.3 per cent on average over the next 12 months, down from 2.9 per cent a year prior.
The unemployment rate in Canada was recorded at 7.1 per cent in September and has risen from 6.9 per cent in June as businesses adapt to the evolving trade outlook, especially for manufacturing.
Although most businesses say they plan to pause hiring rather than lay off workers, the Bank of Canada highlighted the aluminum and steel industry as being at a higher risk for layoffs as a result of tariffs.
“The share of firms planning outright staff reductions remains similar to that in [the] previous quarter. However, special consultations this quarter with firms in the aluminum and steel industry revealed that the impacts of U.S. tariff increases are leading to significant layoffs,” said the Bank of Canada.
“Canadian exporters of steel and aluminum products currently facing sectoral U.S. tariffs reported especially weak outlooks,” said the Bank of Canada.
“Although some exports of primary aluminum have been redirected to Europe, these exporters view this strategy as an unsustainable alternative to U.S. market access because of concerns about long-term profitability.”
Prime Minister Mark Carney is still working with U.S. President Donald Trump on a trade deal, with the goal of reducing or eliminating the U.S. tariffs on Canada that Trump has repeatedly imposed.
© 2025 Global News, a division of Corus Entertainment Inc.
