It has been over six months since Donald Trump imposed 25% tariffs on Canadian goods exported to the United States, except those covered by the Canada-US-Mexico Agreement on trade. The tariff war seems to be at the centre of attention for politicians and the media. Everyone is trying to figure out what this major story means for them, for the economy, and the future of Canada’s relationship with the United States.
As time goes on, things are becoming increasingly tense and difficult to make sense of. Data is slowly being released on the economic impacts of both the tariffs themselves and the broader uncertainty they have caused for businesses. But there is a lot of guesswork in these emerging analyses. We do not yet have a full picture of how Canada’s economy has changed since the August 1st deadline Trump imposed.
That said, there has been a continuous and steep decline in all steel and aluminum exports since January 1st, which makes sense as the US is Canada’s biggest export market. Overall exports to the US in June 2025 were 12.5% lower than they were in 2024.
It is not yet clear how the tariffs are affecting Canada’s overall economy. Statistics Canada says the economy shrank a little between April and May, but grew slightly in June, with GDP fluctuating up and down by around 0.1% month-to-month. The Bank of Canada and others think the economy might shrink more in the second quarter, but we won’t know for sure until later this year.
Here is what we do know right now. The tariff war has caused a lot of uncertainty for both businesses and consumers, and this is bad for investment, employment and economic growth. Considering that around 70% of Canadian exports go to the United States, there is no question that more and higher tariffs will have an even bigger impact on Canada’s economy.
While we have not seen a big rise in the unemployment rate, Statistics Canada says that people are having a harder time finding work and are staying unemployed longer. There was also a big rise in youth unemployment over the summer. These trends cannot solely be explained by the tariff war, but they are likely a reflection of how the current economic uncertainty is negatively impacting employment.
There is one area where there have been significant changes. Canada-US travel has dropped in both directions this year, but especially travel from Canada to the US. Statistics Canada says 7.5% fewer US residents came on car trips to Canada between July 2024 and 2025, while 36.9% fewer Canadian residents visited the United States by car in the same period. These numbers offer a snapshot of the changing relationship between Canada and the US. It is reshaping how people in Canada use our free time, where we spend our money, and our general attitude toward the US. It remains to be seen whether this is a permanent change or just a temporary one.
All in all, the situation remains generally uncertain. People and businesses in Canada are understandably concerned about what the outcome of this ongoing dispute will be. Based on the policy responses we’ve seen so far, business concerns seem to be the much higher priority for the Carney government. For example, the push to eliminate interprovincial trade barriers, or the catastrophic budget cuts being imposed to meet new, higher-than-ever military spending commitments are reshaping government policies.
Amid this uncertainty, we have to be on the lookout for corporations and pro-business politicians who will use this chaos to push their agenda. Together we have to stand up to protect workers’ rights, public services, the environment and indigenous sovereignty.
