Canada’s labor market experienced its most severe contraction since the COVID-19 crisis, with February employment figures revealing a troubling deterioration in job growth. According to newly released statistics, the nation shed over 100,000 full-time positions since January 2026, dramatically reversing gains achieved in late 2025.
The unemployment rate climbed to 6.7%, positioning Canada with the second-highest jobless rate among G7 nations, surpassed only by France. The wholesale and retail trade sector endured the most substantial losses, signaling broad-based economic distress.
Prime Minister Mark Carney, addressing reporters during his official visit to Norway, acknowledged that US trade measures are forcing “big adjustments in the Canadian economy.” While conceding the challenging circumstances, Carney highlighted that wage growth continues its upward trajectory and noted that unemployment remains marginally lower than the 6.8% rate recorded when he assumed office in March 2025.
The opposition Conservative party condemned the report as “terrible news,” with leader Pierre Poilievre attributing Canada’s economic vulnerabilities to Carney’s leadership. Poilievre emphasized that while US tariffs affect multiple nations, Canada uniquely experiences economic contraction under current administration policies. Ahead of his US visit, Poilievre plans to confer with automotive executives and lawmakers regarding his party’s strategy for resolving the ongoing trade dispute.
The employment downturn stems primarily from tariffs imposed by the Trump administration on key Canadian exports including automobiles, steel, and aluminum. Although the USMCA agreement has shielded some Canadian exports from broader 10% global duties, the pact’s future remains uncertain as it undergoes mandatory review this year. President Trump has suggested potentially dismantling USMCA in favor of bilateral agreements with Canada and Mexico.
Katherine Judge, senior economist at CIBC Capital Markets, characterized the employment data as “clearly very worrisome,” noting that “labor market slack has increased and activity is frozen amidst trade uncertainty.” With approximately 67% of Canadian exports destined for US markets—down from the traditional 75%—the Canadian economy demonstrates particular susceptibility to American trade policy shifts.