Canada’s Second-Quarter Export Decline Marks Worst Since 2009
Canadian exports plunged 7.5% in the second quarter of 2025 following the introduction of new U.S. tariffs on key Canadian goods, according to Statistics Canada. The steep decline, which affected industries ranging from steel and aluminum to automobiles, marks the largest quarterly drop in exports since 2009, excluding the COVID-19 pandemic period.
The tariffs, imposed by Washington on goods deemed noncompliant with the Canada-United States-Mexico Agreement (CUSMA), have rippled across multiple sectors. The report released Monday highlighted that the export slump has extended to manufacturing, wholesaling, and employment, all of which posted declines or stagnation during the period.
“Prices for various consumer goods have been directly or indirectly affected by U.S. tariffs and Canada’s countermeasures,” Statistics Canada said, citing impacts on new cars, clothing, footwear, household appliances, groceries, and travel services.
Tariff Shock Hits Manufacturing and Employment
The report found that Canadian businesses engaged in cross-border trade with the United States are scrambling to develop mitigation strategies to handle the disruptions caused by the tariffs. Among manufacturers, 54% reported being negatively affected by the trade measures, while 44% of wholesalers said they experienced similar challenges in May.
Employment data paints a troubling picture as well. Statistics Canada reported no net employment growth from February through August. Public sector hiring has slowed significantly in 2025, and private sector job growth — already weakening before trade tensions intensified — has remained below 2% for 17 consecutive months.
Rising Costs Passed to Consumers
With production costs climbing, many Canadian firms have begun passing expenses onto consumers. The report noted that one-third of businesses have already increased prices on goods and services in response to tariffs, while two-fifths expect to do so within the next year.
Economists warn that if tariffs remain in place, the combination of weaker exports, slower job creation, and rising consumer prices could further strain Canada’s post-pandemic recovery. Businesses, meanwhile, continue to face uncertainty as trade relations between Ottawa and Washington grow increasingly fragile.
Outlook: Trade Strains Threaten Broader Growth
The export downturn underscores how sensitive Canada’s economy remains to shifts in U.S. trade policy. As the United States remains Canada’s largest trading partner, further escalation of tariffs could undermine manufacturing competitiveness and reduce investment confidence.
While both countries have pledged to uphold the principles of the CUSMA framework, the latest measures highlight persistent friction in cross-border trade. Analysts suggest that Canada may need to diversify its export markets or expand domestic manufacturing resilience to offset the impact of ongoing U.S. protectionist policies.
