The Financial Accountability Office says Ontario could face a modest recession because of the U.S. trade tariffs.
The FAO analyzed the potential economic impacts of the trade actions based on announcements made earlier this month.
It surmises that if the tariffs remain in place, Ontario’s real GDP growth would slow to 0.6% in 2025, less than half of what is expected.
Financial Accountability Officer Jeffrey Novak says the tariffs would also result in job loss.
“The FAO estimates that U.S. tariffs would result in 119,200 fewer jobs in Ontario by 2026 compared to the no-tariff outlook,” says Novak.
“This includes 57,700 fewer manufacturing jobs, a change of nearly 7% in the sector.”
Novak says the job loss could reach as much as a138,000 by 2029.
Novak admits that the numbers could change depending on the magnitude and breadth of the tariffs and how well businesses, households and economies respond.
“If tariffs are lowered, the negative impact on Ontario’s economy would be more modest. However, if the U.S. imposes more or higher tariffs, Ontario could experience a deeper recession.”
Novak says it could also be influenced by how government’s respond.
The FAO states the U.S. is Ontario’s most important trading partner, accounting for 77% of its international exports and 60% of its services exports.
Exports to the U.S. account for around 13% of Ontario’s economic activity with an estimated 933,000 people working in trade-related jobs.