Ontario is expected to face a “moderate recession” this year due to the ongoing impact of U.S. tariffs, with tens of thousands of jobs projected to be lost. According to a report released by the Financial Watchdog of Ontario (FAO) on April 30, 68,100 jobs in Ontario are expected to be lost in 2025 if U.S. tariffs remain in place, compared to a scenario without tariffs. The job losses are projected to increase significantly in the coming years, with 119,200 jobs at risk by 2026 and 137,900 by 2029.
FAO Director Jeffrey Novak stated that the actual impact of the tariffs on Ontario’s economy will depend on the scope and level of the tariffs, as well as the responses of businesses, households, and other economic entities. He added that if the U.S. imposes higher tariffs on a broader range of products, Ontario could experience an even deeper recession.
The FAO report outlines two potential scenarios. In the “low-impact scenario,” where tariffs are limited to 10% and trade volumes somewhat recover, Ontario’s real GDP is projected to grow by 1.3% in 2025 and 1.6% by 2026, avoiding a recession. In the “high-impact scenario,” where the U.S. introduces new tariffs on key industries such as copper, lumber, semiconductors, and pharmaceuticals, and increases tariffs on steel, aluminium, and automobiles, Ontario’s GDP could shrink by 0.5% in 2025 and grow by just 0.6% in 2026, deepening the recession. Unemployment is expected to rise, with the average unemployment rate forecast to increase by 1.1 percentage points to 7.7% by 2029.
The manufacturing sector in Ontario is expected to bear the brunt of these tariffs, with about 57,000 jobs expected to be lost in 2025 alone. Windsor is predicted to be the hardest hit, with employment projected to drop by 1.6% by 2026. Other regions, including Guelph, Brantford, Waterloo Region, and London, will also experience significant job losses.
In response to the report, Ontario Premier Doug Ford stated that the province would “wait and see” how the situation develops and expressed optimism about Canada’s relationship with the United States.