Recent employment trends in industries dependent on U.S. demand

U.S. tariffs on goods imported from Canada are ongoing and in flux. The introduction of tariffs and subsequent pauses, a reprieve for Canada-United States-Mexico Agreement (CUSMA)- compliant goods, as well as additional tariffs on autos, steel and aluminum, oil and gas, and lumber, have created uncertainty for businesses, weighing on cross-border trade, non-residential investment and hiring intentions. Economy-wide output slowed when tariffs went into effect, as goods production fell and exports to the United States scaled back markedly. Employment growth was relatively weak during the spring and summer months, and the unemployment rate rose to 7.1% in August, the highest level since 2016, outside the COVID-19 pandemic period. Labour demand has remained subdued as job vacancies continue to trend lower. This paper examines trends in payroll employment following the introduction of U.S. tariffs. It compares employment trends in industries dependent on the U.S. demand for Canadian products with those in sectors that are less reliant on U.S. demand. Industries dependent on U.S. demand for exports are defined as those in which 35% of jobs or more depend on U.S. demand, either directly or indirectly. Moreover, the paper examines trends in hiring and layoff rates across these industry groups, to better understand the underlying labour market dynamics driving variations in employment.