Every ninth worker in Ontario depends on cross-border trade with the United States. When Washington escalated tariffs in early 2026, the Financial Accountability Office ran the numbers: 119,200 fewer jobs by year’s end. Manufacturing absorbs the worst of it, with 57,700 positions projected to vanish.
The FAO projects Ontario’s real GDP growth will slow to just 1.2% in 2026, down from the 1.9% expected before the trade war escalated. Under a high-impact scenario, where additional US tariffs hit copper, lumber, semiconductors, and pharmaceuticals, growth drops to 0.6%.
Ontario GDP Growth Scenarios (2026)
Why Ontario Is So Vulnerable
Ontario is not a trading partner of the United States. It is a dependency. In 2024, the US bought 77% of Ontario’s international goods exports and 60% of its services exports. 933,000 people, one in every nine Ontario workers, depend on cross-border trade. 40% of manufacturing production goes south.
Under the FAO’s baseline scenario, the sector’s real GDP sits 8% below where it would be without tariffs. That’s not a slowdown. That is a contraction.
Canada’s Retaliatory Tariffs
Canada hit back. Ottawa imposed retaliatory tariffs on US goods worth roughly $60 billion annually: bourbon, orange juice, household appliances, cosmetics, steel and aluminum products. A second tranche in March 2026 added plastics, paper products, and agricultural equipment.
The targeting was deliberate. Kentucky bourbon, Florida citrus, Wisconsin dairy: 25% surcharges, aimed squarely at Republican-leaning states. The bet is that domestic pain forces Washington to negotiate. In the meantime, Canadians are paying more too. Wholesale American whiskey prices jumped 30%. Bars are switching to Canadian alternatives or passing the cost along. Either way, the round gets more expensive.
What Consumers Are Paying
Ontarians are already paying more at the checkout. Fresh produce imported from the US, particularly during winter months when domestic supply is limited, has seen price increases of 8 to 15%. American-made appliances carry tariff surcharges that retailers are largely passing through to buyers. Auto parts are another pressure point: repair costs for vehicles that require US-sourced components have risen, and the Canadian Automobile Association reports a noticeable increase in member inquiries, particularly for American-brand vehicles.
The Bank of Canada estimates tariffs could add 0.5 to 1.0 percentage points to consumer price inflation in 2026, wrecking the central bank’s push to get inflation back to 2%. For Ontario families already stretched by housing costs and grocery bills, the tariff surcharge is not an abstraction.
It is the price of apples in February.
The Electricity Wild Card
Energy is its own mess. Ontario exported roughly 19 terawatt-hours of electricity to New York, Michigan, and other border states in 2024, pulling in over $2.5 billion. Those exports aren’t tariffed yet, but the threat of inclusion in future rounds has frozen long-term power purchase agreements. $2.5 billion in revenue, hanging on the mood of a trade negotiation.
Oil and gas tell a different story. Canada supplies roughly 60% of US crude oil imports. Tariff Canadian oil and American gas prices spike, which is why energy has been kept on a separate negotiating track. Mutual assured inflation.
Who Gets Hit Hardest
Windsor, Guelph, Brantford, Kitchener-Cambridge-Waterloo, and London are expected to see the steepest losses. These cities are more reliant on export-focused manufacturing, particularly auto parts and assembly. When a tariff hits a car crossing the border, every supplier feeding that assembly line feels it. And there are a lot of suppliers.
A Canadian Federation of Independent Business survey found the damage spreading well beyond factories. 63% of businesses reported higher expenses. 53% saw reduced profits. 48% experienced lower revenue. 42% faced supply chain disruptions. More than a third paused investments entirely.
CFIB Business Impact Survey
Trade Diversion: Who Benefits
Not everyone is losing. Ontario wineries are selling more as restaurants swap out American bottles. Canadian steel producers have seen orders rise behind the retaliatory tariff wall. Domestic food processors are picking up contracts that used to go south. Craft breweries report an uptick they are happy to attribute to patriotism.
None of it adds up to much (margin gains on the edges of $200 billion in annual bilateral trade).
The Courts Step In
In February 2026, the US Supreme Court ruled that a president cannot use the International Emergency Economic Powers Act to impose tariffs. Trump responded by imposing a 10% tariff through other authorities. By June, US steel and aluminum tariffs doubled to 50%. The court ruling changed nothing.
Then things got worse. Trump floated a 100% tariff on all Canadian imports if Canada finalized a trade agreement with China. All of them. Analysts estimated such a move could raise US inflation by 1.5 to 2% almost immediately, given Canada’s role as a top supplier of crude oil, natural gas, and auto parts.
Ontario’s Response
Ford’s plan, so far, is to spend through it: billions earmarked for retraining, floated support for manufacturers, military vehicle contracts. The March 26 budget is expected to address the disruption head-on.
But the room to manoeuvre is almost gone. Ontario’s cumulative debt is on track to hit $547.9 billion by 2029-2030, up 28.3% from this fiscal year. The province was already running a $9.8 billion deficit in 2024-25.
That’s a lot of money to not have. Spending your way out of a trade war requires borrowing at rates set by people who know exactly how much you don’t have.
Sources and verification: The FAO’s tariff impact report, released February 2026, provides the 119,200 job loss projection, GDP growth estimates, and sectoral breakdowns cited here. The 77% goods export figure and 933,000 jobs estimate are from FAO data based on 2024 trade statistics. The CFIB survey results are from the federation’s published business impact research. Canada’s retaliatory tariff packages ($60 billion in targeted goods) are from the federal government’s trade policy announcements. Consumer price impact estimates (0.5 to 1.0 percentage points) are from Bank of Canada analysis. Ontario electricity export figures (19 TWh, $2.5 billion) are from the Independent Electricity System Operator (IESO). Canada’s share of US crude oil imports (60%) is from the US Energy Information Administration. The US Supreme Court IEEPA ruling occurred in February 2026 as reported by multiple outlets. Ontario’s deficit and debt projections are from the province’s 2025 fall economic statement and FAO fiscal outlook. Trade diversion observations (wine, steel, craft beer) are from industry association reports and media coverage. Current figures should be verified against the March 26 budget once released.
Track Ontario legislature responses to the trade war at Ontario Pulse.