Rates weigh on Ontario’s economy, because the production sector is shedding jobs

Ontario’s economy took a hit in the second quarter of 2025, shedding 38,000 jobs due to a variety of factors, including the impact of American tariffs. According to the province’s financial watchdog, Financial Accountability Officer Jeffrey Novak, the job losses were a result of a combination of early effects of the tariffs and broader economic conditions.

The latest economic indicators paint a bleak picture for Ontario, with losses in employment, production, sales, wholesaler and retail trade, and international exports. The production sector bore the brunt of the job losses, with 29,400 jobs lost in the second quarter – the sharpest quarterly decline in the sector since 2009, excluding the COVID-19 pandemic.

The newly imposed American tariffs on exports have had a significant impact on the production sector, leading to a 3.5 percent decline in employment. Canadian aluminum and steel products were particularly hard hit by the tariffs in June.

While the loss of 56,600 full-time jobs was partially offset by the addition of 18,700 part-time jobs, the unemployment rate in Ontario rose to 7.8 percent – the highest rate since the end of 2012, excluding the pandemic. Unemployment rates were particularly high in Windsor, where the unemployment rate rose to 11.2 percent in the second quarter.

In response to the job losses, the government has launched a $1 billion fund to support companies affected by the tariffs on steel, aluminum, and auto products. The Protect Ontario Financing Program is part of a $5 billion support package aimed at helping businesses weather the economic storm.

However, critics, including Liberal financial critic Stephanie Bowman and NDP economic development critic Catherine Fife, argue that the government’s efforts are not enough to protect jobs and support struggling families. They call for a more comprehensive plan to address the economic challenges facing Ontario and ensure stability for workers in affected industries.

Despite the government’s efforts to support businesses and workers, the future remains uncertain for Ontario’s economy as it grapples with the ongoing impact of American tariffs and broader economic challenges.