TORONTO – A “modest recession”, just like the one forecast by Deloitte in its report “Trade Tensions Stall Momentum” on Canada, published yesterday (read our article here): the Financial Accountability Office of Ontario (FAO) also predicts a bleak future for the economy. 

In its report entitled “The Potential Impacts of US Tariffs on the Ontario Economy” and published almost simultaneously with the Deloitte one, the FAO only examines Ontario but the conclusions are almost the same and the cause is the US customs duties, which hit the economy and damaged relations with the province’s main trading partner.

In particular, the tariffs on steel, aluminum and cars imposed by the President of the United States, Donald Trump, on Canadian exports, would slow Ontario’s growth in 2025 and could lead to a “modest recession” this year. The following year, growth would remain slow, but would return to just over 1%. The reason why Ontario’s economy would be affected is its dependence on exports to the United States. According to the FAO, in fact, 77% of Ontario’s total goods exports go to the United States, along with 60% of the province’s services exports. The “blowback”, therefore, could be severe.

Ontario Finance Minister Peter Bethlenfalvy commented on the report by saying that “we will protect jobs, we will protect this economy.” The FAO report also talks about jobs and notes that the province could be set to lose a significant number of jobs directly affected by U.S. tariffs: specifically, there could be 68,100 fewer jobs in Ontario this year due to tariffs and 119,200 fewer next year (compared to a scenario in which no tariffs were imposed). This could increase the unemployment rate by 1.1 percentage points – with manufacturing the hardest hit – over the period 2025-2029, settling on average at 7.7%.

Ontario Premier Doug Ford, however, remains optimistic. “I don’t agree, let’s see what happens” he said. “I’m confident, I really am. I always look at the glass half full and no one can predict the future, but I do predict that we will do better than other jurisdictions around the world and in North America…”. But MPP Catherine Fife of NDP disagrees, saying the report does contain “good data” and a “road map” for managing the economy. “The fact that the premier doesn’t acknowledge that these numbers are real and that this tariff crisis is real, and that he doesn’t hope that this storm will pass, doesn’t instill a lot of confidence…” she added. “It’s actually disrespectful to that office…”.

Only time will tell who was right.

To download and/or read the whole FAO’s report, click here: Impacts-of-US-Tariffs-on-the-Ontario-Economy-EN

Photo by Lucas Wendt from Pixabay