Trump’s Tariffs and Impacts on Employment – Key Considerations for Employees

On April 2, 2025 (previously planned March 4, 2024) President Trump is set to implement a 25% tariff on all Canadian goods, and a 10% tariff on energy.  In times of economic uncertainty, your employer might need to reduce the workforce in the face of rising costs to their businesses. As an employee, understanding these changes and your rights under employment law can help you navigate potential challenges. This article tackles key issues that you may be wondering.

Can the employer lay me off?

Temporary layoffs are one strategy employers may use to manage financial strain caused by the tariffs in hopes of recovering their losses. A layoff is defined as a termination of employment by the employer for business-related reasons such as cost-cutting.

Subject to provincial employment standards legislation, an employer may use this as an option to reduce its workforce. However, employers do not have an automatic right to impose temporary layoffs unless it is written in the employment contract, collective bargaining agreement (for unionized employees), or if it is a common industry practice.

If these exceptions do not apply, the temporary layoff could be considered a constructive dismissal, which means greater entitlements to severance pay for the employee.

If your collective agreement does not include provisions for layoffs and recalls, you may want to meet with your union representatives right away to determine how they intend to fairly reduce the workforce that keeps seniority in mind.

What else can the employer do?

Some employers may attempt to make significant adjustments to the terms of their employees’ employment without their consent. Major modifications, such as a demotion, pay cut, or workload increase, might be a strong basis for a constructive dismissal claim.

Employers may choose to terminate non-unionized workers for any reason at all, which is known as a termination without cause. It is considered legal when you are provided with full severance pay and/or notice of the termination, and the reasons for your termination are not discriminatory.

Certain eligible employers may be able to take advantage of Canada’s Work-Sharing Program. The Work-Sharing Program helps employers and employees avoid layoffs when there is a temporary decrease in the normal level of business activity (minimum 10% reduction in earnings), and the decrease is beyond the control of the employer. The arrangement must last a minimum of six weeks and can last up to twenty-six weeks.

If you are terminated, speak to a lawyer from our firm before signing anything to make sure that you are properly compensated and fully informed of your legal rights.

What if my employer benefits from tariffs?

Some businesses might thrive and increase their work as a result of acquiring other businesses through a share purchase or an asset purchase. However, if you are being required to sign a new employment contract with a new owner, you should have a lawyer review the agreement to make sure that you are being provided with proper documentation from the old employer before signing up with the new employer because there might be different considerations that apply to each scenario.

Final Note

While this is no doubt a terrifying time, do not wait to act. Have one of our employment lawyers review your existing contractual, common law, or collective agreement obligations, and where possible, prepare your business to absorb job losses with help from experienced legal counsel.

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