Assessing Canadian Labour Market Resilience Amid U.S. Tariff Pressures

The Canadian labor market has faced significant headwinds from U.S. tariff pressures in 2025, with trade-sensitive industries like manufacturing, steel, and aluminum bearing the brunt. July 2025 alone saw 40,800 jobs lost, including 10,000 in manufacturing, as U.S. tariffs on steel, aluminum, and automotive goods disrupted supply chains and forced businesses to delay investments [6]. Yet, amid these challenges, strategic sector positioning reveals opportunities for investors in industries insulated from or adapting to these pressures.

Vulnerable Sectors: Tariff-Driven Employment Contractions

The manufacturing sector, which relies on U.S. demand for 42% of its value added, has contracted by 1.5% in real GDP due to trade restrictions [1]. Steel and aluminum exports have plummeted by 27.5%, with the United Steelworkers’ union reporting 1,000 layoffs [6]. Automotive firms, too, are reevaluating supply chains, with nearly one-third of businesses expecting high tariff impacts [4]. These trends underscore the fragility of export-dependent industries in a protectionist trade environment.

Resilient Sectors: Infrastructure and Green Technology as Anchors

While traditional manufacturing struggles, infrastructure and green technology are emerging as pillars of resilience. Canada’s $200 billion infrastructure plan is projected to drive a 3.6% GDP growth in 2025, supported by a 1.4% employment growth rate in the sector [2]. Clean technology, meanwhile, is thriving, with 192,632 jobs expected by year-end and a 30.7 megatonne reduction in GHG emissions from ISED-backed innovations [2]. Ontario, Quebec, and British Columbia dominate this sector, accounting for 77.4% of cleantech jobs [1].

Investors should note the federal government’s $60 billion clean energy investment plan, including $10 billion for green infrastructure and $10 billion for clean power [1]. Provinces like Quebec are advancing 185-billion-dollar renewable energy strategies, while British Columbia and Ontario expand energy storage projects [2]. These initiatives not only mitigate U.S. tariff risks but also align with global decarbonization trends.

Non-Ferrous Metals: A Hidden Growth Engine

The non-ferrous metals industry, including copper and zinc, is bucking the trend of industrial decline. With a 5% CAGR from 2026–2033, this sector is driven by demand in aerospace, EVs, and electronics [2]. The non-ferrous metal balls market, valued at $1.2 billion in 2024, is projected to reach $1.8 billion by 2033 [1]. This growth is fueled by Canada’s robust mining infrastructure and proximity to raw materials, offering vertical integration advantages [1].

However, the broader non-ferrous foundry sector faces a 9.0% revenue decline from 2020–2025 due to auto and aerospace slowdowns [2]. Yet, a 2% CAPEX recovery in 2025, driven by potash and copper-zinc mining investments, signals long-term potential [3].

Strategic Recommendations for Investors

1. Infrastructure and Clean Energy: Prioritize investments in firms benefiting from federal and provincial green infrastructure programs. The OECD projects 1.4% employment growth in infrastructure, supported by a $15 billion Canada Growth Fund [5].
2. Non-Ferrous Metals: Target companies in copper, zinc, and advanced alloys, leveraging demand from EVs and renewable energy. The non-ferrous metal balls market’s 5% CAGR offers a compelling entry point [1].
3. Diversification: Avoid overexposure to U.S.-dependent sectors like steel and aluminum. Instead, allocate capital to industries with CUSMA exemptions, such as agriculture and services [3].

Conclusion

While U.S. tariffs have strained Canada’s labor market, the country’s strategic pivot to infrastructure, green technology, and non-ferrous metals demonstrates resilience. Investors who align with these adaptive sectors can capitalize on long-term growth while mitigating trade-related risks. As the Bank of Canada and federal government continue to prioritize policy-driven investments, the path forward for Canadian industries is one of innovation and diversification.

Source:
[1] 2025 Canadian Infrastructure Trends [https://bennettjones.com/Blogs-Section/2025-Canadian-Infrastructure-Trends]
[2] Canada ranks 8th globally in clean energy technology and infrastructure investment [https://www.lexpert.ca/news/infrastructure-law/canada-ranks-8th-globally-in-clean-energy-technology-and-infrastructure-investment/391078]
[3] OECD Economic Surveys: Canada 2025 [https://www.oecd.org/en/publications/2025/05/oecd-economic-surveys-canada-2025_ee18a269.html]
[4] Impact of tariffs on businesses in Canada [https://www150.statcan.gc.ca/n1/pub/11-621-m/11-621-m2025007-eng.htm]
[5] Key facts about Canada's competitiveness for foreign direct investment [https://international.canada.ca/en/global-affairs/corporate/reports/chief-economist/international-investment/2025-01-key-facts]