Trade War Escalates: Canada Faces Economic Blowback as Tariffs Hit Auto Sector and Job Markets
As Canada is going through the fallout of an intensifying trade war, the economic repercussions are becoming increasingly real, not just in policy circles, but on factory floors across the country. The latest casualty is the Cami Assembly plant in Ingersoll, Ontario, a key manufacturer of electric commercial vans, where nearly 500 workers are set to lose their jobs in the coming months. Why the U.S. Is Waging a Tariff War against Canada and the world?
The U.S. Republican government facing unsustainable debt levels, $36 trillion in total debt and $1.1 trillion in annual interest payments, is using tariffs as a tool for both fiscal leverage and geopolitical positioning. Officials justify the tariffs under the guise of correcting trade imbalances, encouraging domestic investment, and protecting national security.
However, the economic rationale is shaky. For example, one now-infamous Republican tariff formula calculates “reciprocal duties” by dividing trade deficits by total imports, a method dismissed by economists as illogical. Yet these flawed calculations have led to real-world consequences, with Canada and the EU among the top targets.
The consequences of the U.S.-Canada tariff conflict are becoming increasingly tangible and perhaps nowhere more stark than at General Motors’ Cami Assembly plant in Ingersoll, Ontario. The facility, which produces Chevrolet BrightDrop Vans, is set to shut down for three weeks starting Monday, followed by a brief two-week restart, and then a prolonged layoff period extending into October. When production resumes this fall, it will do so at reduced capacity, cutting up to 500 jobs and shifting to a single-shift operation. This significant disruption underscores how tariffs are directly impacting Canadian industry and employment, especially in the auto sector.
A U.S. report estimates that the 25% U.S. tariff on Canadian-made vehicles could add over $15,000 USD to the price of a BrightDrop van, pushing it above $70,000. GM sold just 1,500 units in 2024, far below expectations. The rising costs have now halted plans to bring a new vehicle model to the Cami plant.
Unifor and GM are attempting to soften the blow with retirement packages and buyouts, but the layoffs reflect a broader trend: tariffs are choking the competitiveness of Canadian exports, particularly in sectors like automotive and steel.
What Canadians Should Do: Strategies in a Volatile Environment?
- Reassess Equity in Vulnerable Housing Markets
Homeowners in areas reliant on U.S.-linked manufacturing, such as Windsor, Ingersoll, and London, should consider cashing out home equity now. With layoffs looming and local economies exposed, real estate values could come under pressure. Refinancing or setting aside an emergency fund using home equity can provide financial security through economic turbulence.
- Avoid U.S.-made Goods With High Tariffs
With tariffs increasing the price of many U.S. imports, Canadians can shift their purchases to non-U.S. alternatives, supporting local or international producers not affected by the trade dispute.
- Prepare for Prolonged Uncertainty
While political pressure in the U.S. may eventually force a retreat from aggressive tariffs, likely around the June 2026 midterm elections, Canadians must brace for at least a year of volatility. Economic warfare is slow-moving, and the ripple effects on inflation, employment, and consumer sentiment will continue to unfold.
- Make Smart Financial Adjustments
- Refinance high-interest mortgages if possible, especially if you’re still locked in above 5.5%.
- Review investments: with GICs now yielding around 2.6%, barely keeping up with inflation, investors may want to reallocate capital into real estate or equities.
- Stay calm amid noise: ignore short-term panic and base decisions on long-term fundamentals.
The tariff war may have started as a political maneuver, but its real-world consequences are hitting home from factory shutdowns to rising grocery bills. The closure and downsizing of the Cami plant is a stark warning: even niche, future-focused industries like EVs are not immune to protectionist policies.
For Canadian policymakers, the path is clear: stand firm, retaliate strategically, and protect key sectors. For Canadian households, the message is also clear: adjust early, diversify wisely, and stay informed.
As Winston Churchill once said, “Never let a good crisis go to waste.” For those who missed the opportunity during the pandemic downturn, now is the time to prepare, not panic.