Ontario trade war report warns: Windsor economy ‘impacted the most’

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Windsor will see growing unemployment and have the hardest-hit economy in Ontario by 2026 as a result of the Canada-U.S. trade war, a new provincial report warns.

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Due to tariff actions by both countries, “Windsor is expected to be impacted the most, with employment 1.6 per cent lower in 2026,” the report by the Financial Accountability Office of Ontario says. 

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The report looks at Ontario’s trading relationship with the U.S. and estimates the potential impacts of U.S. tariffs on Ontario’s exports, imports, gross domestic product, employment and inflation. 

Guelph, Brantford, Kitchener-Cambridge-Waterloo and London are next on the list of areas that face the highest impacts of tariffs. 

The trade war employment impact for Windsor translates into a loss of about 3,900 local jobs, said Justin Falconer, chief executive officer of Workforce WindsorEssex. 

Falconer said the report likely also takes into account some mitigating efforts in Canada. 

“There are going to be lots of moving parts to this,” he told the Star. “There’s going to be periods in which there’s greater job loss, and then there’s going to be things that we can do to get some job gains.” 

The actual job losses due to tariffs will likely be higher, he said, but efforts by Canadian governments can balance those losses with some positive job growth. 

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Tariffs are going to impact 96 per cent of all goods that cross the border to the U.S. from Windsor-Essex, Falconer said. 

A Windsor Star story published Wednesday that suggested the entire North American auto industry will be less competitive and likely smaller as a result of tariffs is logical, Falconer said. 

“Nobody wants to be buying cars when there’s tariffs like this on products. When the price of cars becomes unaffordable to people, and not sort of incrementally more, but dramatically more, you’re selling fewer cars. 

“You’re also going to need to make fewer cars, and there’s going to be less movement of goods. There’s going to be fewer parts.

“In effect, you’ve sort of diminished the entire industry through this greed of this tariff.” 

Changes to how businesses operate will also have an impact.

“If we wake up a year from now and having only lost 3,900 jobs, net change, I feel like we could be further ahead than what some imagined,” Falconer said, adding he feels for those who will likely lose their jobs.

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“But the report probably also relies on a greater pivot to European markets. It probably relies on a repatriation of some of the supply chain and other positive enabling and supporting factors.” 

There are a lot of factors that go into predicting the economic outlook of trade actions, including how the Bank of Canada adjusts lending rates and efforts by the Canadian and Ontario governments to support companies, he said. 

But there’s also potential for growth in the manufacturing area, Falconer said. 

“We could be building anything for anybody in the world because of our manufacturing prowess and our ability to make moulds. We have four of the five largest mouldmakers in all of the world located in our backyard.

“So if you need a mould, you should be calling Windsor-Essex.”

Peter Gossmann, sales manager at Cavalier Tool and Manufacturing in Windsor, said the mouldmaking sector will be affected more by the general economic outlook, rather than tariffs, because it falls under the CUSMA trade agreement, so products are not subject to tariffs. 

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“We’re still competitive with U.S. counterparts,” Gossman said. “Actually, we’re competing more with our Canadian associates here than we are with the U.S. because we have such a large infrastructure here for toolmaking. 

“I’m fairly optimistic going forward because, certainly, quoting activity for our industries has tripled in the last four weeks.” 

About 95 per cent of the market for Cavalier Tools is in the U.S., he said. “We’re competing with Europeans. We’re competing with  Asia … probably India will become a bigger part in the future.” 

There are plenty of projects that will require Cavalier’s products, including the NextStar EV battery plant in Windsor and battery plants set for Alliston and St. Thomas, Gossman said. 

The report by the Financial Accountability Office, which provides independent financial and economic analysis to the Legislative Assembly of Ontario, points to the U.S. accounting for 77 per cent of Ontario’s international trade and 60 per cent of the province’s total services exports, generating 13 per cent of Ontario’s GDP in recent years.

That’s more than double the contribution of Ontario’s exports to the rest of the world.  In 2024, an estimated 933,000 Ontario jobs were related to exports to the U.S., about one in every nine jobs in the province, the report says. 

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