Policy Forum: Tax Policy for Strategic Advantage—Building Canada's Human Capital Edge in the AI and Tariff Economy

The Canadian job market faces a significant transition as a result of the advancement of artificial intelligence (AI) technology and a new approach to tariffs and trade by the US administration. Without meaningful change in domestic policy, an increase in unemployment rates may have a negative impact on Canada's economy, communities, and the health and well-being of individuals. In this article, we review prior studies to develop a framework that allows us to map the probable impacts of unemployment levels on economies, communities, and individual wellness outcomes. We analyze the potential impact of tariffs and AI adoption on the Canadian job market between 2025 and 2030 using scenario analysis, and find that the most likely outcome is an unemployment rate peaking above 9 percent. Addressing this challenge requires an integrated approach across government policies, including tax policy, to strengthen the economic pillars supporting business enterprises, to advance the development of skills and training, and to drive the creation of enterprise value by employing Canadian talent. We identify critical success factors for corporate tax incentives, suggest prospective policies, and recommend bold policy changes to elevate investment in human capital and help Canada to thrive in an era of AI and tariffs.