how 2025 U.S. tariffs are impacting workforce planning in Canada.

The 2025 U.S. tariff policies are reverberating across the Canadian economy—impacting trade flows, business confidence, and workforce planning. As duties on Canadian goods increase or shift, companies are facing margin pressure, supply chain delays, and hiring uncertainty.

Industries such as manufacturing, logistics, and automotive are particularly exposed. In response, Canadian employers must rethink how they plan, scale, and manage their workforce to protect productivity and adapt to cross-border volatility.

2025 U.S. tariffs: a brief overview.

Canada has been partially shielded from the broader U.S. reciprocal tariffs announced on April 2. However, Section 232 tariffs still remain, applying 25% tariffs on all Canadian steel, aluminum, and auto exports, alongside an additional 10% tariff on Canadian energy and potash exports.

In response, Canada has implemented retaliatory tariffs that will apply to $29.8 billion worth of U.S. goods, including steel, aluminum, and U.S. goods like tools, computers, and cast-iron products. These bilateral trade measures are creating ripple effects across Canada, leading to rising input costs and shrinking profit margins set to impact 80% of Canadian businesses.

This strategy also poses significant risks for the Canadian workforce, which saw a decline of 33,000 jobs in March. Workforce planning strategies that include careful forecasting, risk mitigation, and transparent communication can help organizations navigate staffing adjustments while minimizing the negative impacts on workers.

the Canadian manufacturing workforce is facing significant headwinds.

The Canadian manufacturing workforce is already seeing immediate impacts from 2025 U.S. tariffs – and the automotive industry is particularly vulnerable due to highly integrated cross-border supply chains. In Ontario’s manufacturing corridor, General Motors already announced plans to shut down in May and reopen at half capacity in October.

These short-term strategies are becoming more common in manufacturing as contracts are paused or delayed. As employers re-evaluate hiring and workforce plans, temporary and rotational layoffs, workforce reductions, and a shift to temporary workers are helping manage costs. However, ongoing innovation is crucial for forward-thinking manufacturers hoping to weather the storm.

As Canadian Manufacturers and Exporters (CME) notes, long-term resilience will rely on strategies that prioritize interprovincial trade, enhance automation, and upskill Canadian workforces to embrace smart manufacturing.

the 2025 U.S. tariffs disrupt the Canadian supply chain.

While manufacturers feel the direct impact of tariffs, Canada's logistics sector faces a different challenge: adapting to increasingly unpredictable cross-border trade flows. As tariffs alter shipping volumes, routes, and timelines, companies responsible for moving goods between Canada and the U.S. are recalibrating their workforce strategies.

This includes modifying warehouse staffing patterns and shift schedules to align with delivery flows. Many logistics providers are leveraging flexible staffing models that include temporary workers to manage unpredictable surges and support complex re-routing efforts.

More companies are also seeking compliance expertise to meet USCMA origin requirements, especially for complex products, increasing demand for supply chain management professionals to help diversify supplier networks.

2025 U.S. tariffs turn workforce agility into a risk management strategy.

For Canadian employers impacted by tariffs, uncertainty is one of the biggest threats – and workforce agility is a key risk management strategy. Temporary staff can help businesses scale labor costs to meet demand; however, agility demands more than just a contingent workforce.

Strategies like temp-to-perm hiring, cross-training, and reskilling can create longer-term agility that helps business keep evolving while they pivot to meet short-term demands.

temp-to-perm hiring

Temporary staff provide immediate flexibility, but in some cases, operational demands require a permanent hire. Permanent employees build institutional knowledge that can be crucial in complex work environments, with perspective that gives them the ability to make strategic insights. When full-time hiring is risky, temp-to-perm hiring lets employers evaluate worker performance on the job – while avoiding the up-front cost of a full-time hire.

cross-training

When workers are trained on jobs outside of their primary roles, employers can reassign them to different stations to respond to demand. For example, one Alberta farm dedicates two weeks each season learning new skills to keep operations smooth as needs change. This not only makes full-time teams more adaptable, but also allows for a more flexible approach to hiring.

automation and reskilling

With the potential to cut production times tenfold, AI-enabled tools and processes will be a significant driver of long-term success. Employers that combine strategic automation with long-term reskilling can offer top talent a path to career growth, and harness significant productivity gains that make them more competitive.

Combining these approaches requires aligning hiring with talent management strategies to tap into the full potential of future workforces. In industries impacted by tariffs, each strategy also requires a careful cost-benefit analysis to decide which direction to take first.

how to tackle the era of 2025 U.S. tariffs

Transitioning to an agile workforce isn’t easy – and many Canadian employers will still need to pause operations while they realign hiring practices with economic realities. However, it’s also crucial to approach any significant workforce adjustments with caution, keeping a finger on the pulse of new developments.

communicate clearly with employees and unions

Clear, early communication about business challenges and potential workforce adjustments will help maintain employee trust. Encouraging employee feedback can help you understand employee concerns and respond directly to them.

review employment contracts to assess risk

Before restructuring workforces, review contracts to understand your legal obligations and potential risks. For example, Canadian employers can’t enforce temporary layoffs unless they’re either a standard industry practice or explicitly spelled out in an employment contract. Mass layoffs usually require longer notice and higher severance pay, and may incur higher costs than expected.

engage with government programs or trade advocacy groups

As economic pressures intensify, government programs and trade advocacy groups can offer resources for support. For example, the Canadian government recently announced new support for businesses affected by tariffs, including some exemptions from Canadian tariffs. Trade advocacy groups often have free support for understanding current employment law.

diversify labor cost control strategies with automation and AI

A flexible workforce can help keep costs down in the short term – but the organizations that invest in automation and AI will keep costs down in the long term. Maintaining an agile workforce can help businesses budget for strategic investments in long-term growth.

building resilience into Canadian workforce planning.

As 2025 unfolds, U.S. tariffs will continue to have an impact on Canadian businesses. For industries like manufacturing, the impact has been swift; for others, it will depend on how trade policy evolves.

As your partner for talent, we’re committed to helping companies respond to the current crisis, and build the organizational resilience to handle new economic shifts – no matter what form they take. To learn more about how your organization can adapt to 2025 U.S. tariffs, reach out to a talent expert today.