As Canadian employers continue to experience economic strain from U.S. tariffs, it’s important for human resources professionals to focus on communication and creative strategies to retain talent, says Stephen Shore, a labour and employment lawyer at Littler LLP.
While the U.S. Supreme Court has struck down President Donald Trump’s global tariffs implemented in April 2025, they’ve been replaced with a 10 per cent global tariff. Although goods traded under the Canada-U.S.-Mexico Agreement are exempt from these tariffs, a review of that trade deal will take place later this year. In addition, tariffs targeting specific sectors, such as steel and automobiles, remain in place.
Lowered production levels, targeted layoffs and elevated prices have led to restructuring risk and complicated wage and bargaining dynamics for employers. This is causing a lot of uncertainty for employers as they adapt their workforce management strategies and plan for all possible outcomes, says Shore.
“It’s a tricky time for companies figuring out who they’re going to be selling their products to, how they should staff [their facilities], how their supply chains are going to change and what that’s going to mean for their long-term production schedule.”
To help with retention during such a tumultuous time, HR professionals can focus on regular communication and town halls to clarify how the employer is responding to what employees are hearing on the news or reading online, says Shore. “And perhaps in a [more vulnerable way], employers can try to seek employee patience and cooperation as they think about how to manage workforce challenges and production schedule issues caused by these uncertainties.”
Most employers are likely going to be focused on incentives and how they can redesign their retention programs, he adds. “[They can] create things like return-to-work bonuses after temporary layoffs to try to ensure they still have access to that workforce and skill base when they need it. I think being creative in terms of benefits offerings, incentives and bonuses is probably going to be just as impactful in a real-world environment as the more intangibles like communication.”
Shore notes there’s a legal risk for employers who want to temporarily reduce their staffing levels, both to address cash flow issues and deal with production lulls.
“The legal risk associated with temporary layoffs — which many employers learned during [the coronavirus pandemic] — is that there is no legal right under employment statutes to lay an employee off and maintain the employment relationship in a unilateral way. Employees can contractually agree to a temporary layoff . . . but outside of the employee providing that type of consent, it becomes an option to that employee to . . . treat it as a termination.”
He adds employers are also facing risks of constructive dismissal claims, either from executing the temporary layoffs in a way that was improper, not seeking the right consents or not thinking about the potential implications.
Read: Ottawa launching $6.5 billion business aid package, EI changes amid Trump tariffs