Trade protection measures, especially tariffs on certain goods, are starting to leave their mark. According to RBC, targeted industries in Canada (manufacturing, transport, warehousing) are already feeling the pinch. These are not small disruptions. Exports of products hit by tariffs have fallen sharply, particularly in steel, aluminum, aerospace, and certain machinery. But while the pain is real, economists believe the shock is manageable, especially outside the sectors most exposed.
The broader economy is showing signs of softening: growth is lagging, job creation has slowed, and labour markets in both Canada and the U.S. are cooling. Still, RBC expects only modest additional job losses, mostly in the trade‐exposed parts of the economy. Unemployment in Canada is forecast to peak near (but not far above) its current level (about 7.1 %) before recovering. In the U.S., inflation remains elevated, but labour weakness is creating space for the Federal Reserve to begin cutting interest rates earlier than previously expected.
What This Means for Staffing Firms
If you run or work in a staffing firm, or are watching the labour market, the RBC findings suggest several key shifts and pressures.
Risks & Challenges
Sectoral Pain: Jobs in sectors like manufacturing, transport, aerospace, steel, and aluminum are especially at risk. Firms that supply those industries, whether temporary workers, contract labor, or recruitment, may see demand drop.
Regional Disparities: Since these industries are not evenly distributed geographically, staffing firms in regions heavily reliant on trade-exposed sectors will feel more of the negative effects; plants shut down, orders delayed, or moved elsewhere.
Higher Costs: Tariffs often mean higher input costs. For any business depending on global supply chains or component imports, the knock-on effects may include reduced hiring or a shift toward automation to keep costs down.
Uncertain Policy Environment: With trade agreements like CUSMA (US-Canada-Mexico Agreement) offering exemptions, there is some protection. But future reviews (e.g. scheduled for 2026) could change rules. Regulatory uncertainty tends to dampen investment (and thus hiring) in affected industries.
Opportunities
Labour Shift to Resilient Sectors: Industries less exposed to tariffs (especially those driven by domestic demand) are holding up better. Staffing firms can redirect efforts toward sectors like healthcare, services, retail, construction, and domestic-oriented manufacturing.
Upskilling & Redeployment: As workers in exposed sectors lose jobs, there is potential for firms to facilitate retraining or shift them into roles in growing segments. There will likely be demand for skills that cut across sectors: supply chain, logistics, maintenance, technical repair, and so on.
Temporary and Flexible Work: With uncertainty, businesses may hesitate to commit to large permanent hires and instead lean more heavily on temporary, contract, or flexible staff. Staffing firms are well placed to fill that gap, especially for short-term needs, project work, or transitional roles.
Geographic Diversification: Firms may find opportunity in expanding into or focusing on regions where industries are more insulated from trade shocks. Also, cross-border staffing (where legal and feasible) may benefit from shifts in trade flows or the relocalization of some supply chains.
Outlook: What To Watch
Rate Moves: In Canada, the Bank of Canada is expected to hold rates for now, but the odds of future easing have risen. In the U.S., rate cuts may come sooner than previously thought. Lower rates tend to support hiring, once inflation is under better control.
Unemployment Peaks & Timing: RBC expects limited job losses in Canada, concentrated in trade-exposed sectors, with unemployment peaking near present levels. For staffing firms, that might mean a short-term surge in available job seekers, especially from affected sectors.
Inflation Pressure: Tariffs feed into higher import costs; as businesses pass them on to consumers, inflation may remain stubborn. That can squeeze margins (making companies more cautious about hiring) but also put pressure on wages, which may benefit staffing firms if there is upward pressure for labour compensation.
Policy & Trade Agreements: Updates or revisions to trade agreements like CUSMA (or new tariff policy) could change the landscape again. Staffing firms should keep an eye on regulatory developments, potential relief for certain sectors, or new trade-barrier risks.
Consumer Demand & Domestic Spending: Despite trade headwinds, domestic spending in Canada has been resilient. If that resilience holds, it could help soften the employment blow in consumer-facing industries, services, and construction. Staffing firms focused there may see steadier demand.
Final Take
Tariffs are acting like a wedge: they’re hurting specific industries and regions, introducing uncertainty, and shifting investment patterns. But the full economy isn’t derailing. For staffing firms, the picture is mixed. There are clear challenges, especially in trade-exposed sectors, but also room to adapt and even benefit from shifts in labour demand.
Firms that are agile and able to pivot into resilient sectors, help displaced workers transition, leverage temporary labour models, and navigate policy changes, are likely to fare better. The next year or so may feature modest softness, but also opportunity, if the staffing industry can adjust to the changing trade and economic landscape.