The state of trade talks and their impact on the staffing industry

The latest on tariffs - July 2025

OTTAWA — As Canada races toward a self-imposed July 21 deadline to reset its trade relationship with the United States, the country’s economic pulse continues to weaken. The latest Purchasing Managers’ Index (PMI) readings released this week show deepening contractions in both manufacturing and services sectors, raising fresh concerns for employment and labor market stability across the country.

The manufacturing PMI, compiled by S&P Global, fell to 45.6 in June—its lowest reading since the early days of the pandemic. It marks the fifth consecutive month of contraction, reflecting sharp declines in new orders, export demand, and factory output. Services fared no better. The Services Business Activity Index dropped to 44.3, down from 45.6 in May, signaling a seventh straight month of decline as consumer demand cools and firms hesitate to invest in expansion.

These figures arrive as Ottawa tries to de-escalate tensions with Washington, which have flared over a digital services tax and a renewed wave of U.S. tariffs. While Canada recently withdrew its plan to impose a 3% levy on U.S. tech giants—a move that had threatened to derail trade negotiations—significant barriers remain. Chief among them: the Trump administration’s 50% tariffs on Canadian steel and aluminum, which have sent shockwaves through the industrial base in Quebec and Ontario.

Behind the macroeconomic data lies a much more human story—one of employers pulling back, workers facing job losses, and staffing firms stuck in limbo.