Canada has witnessed a sharp deterioration in its labour market in early 2026, with more than 100,000 full-time jobs lost since January, intensifying pressure on Prime Minister Mark Carney as his government grapples with the economic fallout of escalating US trade measures.
According to the latest labour data released on Friday, the country’s unemployment rate climbed to 6.7%, placing it among the highest within the G7 grouping—second only to France. The figures mark a worrying trend, particularly as February alone recorded the steepest monthly employment decline since the COVID-19 pandemic, effectively erasing much of the job gains seen toward the end of 2025.
The downturn has been especially severe in the wholesale and retail trade sector, which bore the brunt of job cuts amid slowing economic activity. Analysts say the contraction reflects broader uncertainty gripping businesses, many of which are holding back on hiring and investment decisions due to ongoing trade tensions with the United States.
Reacting to the figures, Carney acknowledged the economic disruption caused by Washington’s policies, stating that US trade actions are triggering “significant adjustments” within the Canadian economy. Speaking during an official visit to Norway, he attempted to strike a measured tone, pointing out that overall wages in Canada have continued to rise and that the unemployment rate remains slightly lower than the 6.8% recorded when he assumed office in March 2025.
However, the data has drawn sharp criticism from opposition leaders and economists alike. Pierre Poilievre, leader of the Conservative Party, described the report as “terrible news” and blamed the government’s handling of the economy for Canada’s relatively weaker position among its G7 peers. While acknowledging the global nature of the challenges, including policies introduced by US President Donald Trump, Poilievre argued that Canada’s economic contraction stands out compared to other nations facing similar tariff pressures.
He further indicated plans to raise the issue during an upcoming visit to the United States, where he is scheduled to meet automotive industry executives and lawmakers to outline his party’s approach to resolving the ongoing trade dispute between the two countries.
Since returning to office, Trump has imposed tariffs targeting key Canadian industries such as automobiles, steel, and aluminium, leading to widespread job losses. In addition, broader tariff measures—including a global 10% duty—have added to the strain, although some Canadian exports have been partially protected under the existing North American trade framework.
The future of the United States-Mexico-Canada Agreement (USMCA) remains uncertain, with a mandatory review scheduled this year. Trump has signalled a willingness to either scrap the agreement or renegotiate separate bilateral deals with Canada and Mexico, further fuelling economic anxiety.
Economists warn that this uncertainty is a major factor behind the recent slump in employment. Katherine Judge, a senior economist at CIBC Capital Markets, described the latest labour report as deeply concerning, noting that hiring has slowed and economic activity appears to be stalling amid unresolved trade tensions.
Canada’s heavy reliance on the US market compounds the risk. The United States remains by far its largest trading partner, historically accounting for nearly three-quarters of Canadian exports, though that share has recently declined to about 67%. Experts caution that unless trade relations stabilise, Canada’s labour market could face continued pressure in the months ahead.United States
