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Trump’s Inauguration Speech: A Warning Shot to Ontario’s Economy

January 21, 2025

President Donald Trump’s inaugural address on January 20, 2025, offered a clear roadmap of his administration’s priorities, and Ontario should be alarmed. Amid his pledges to revitalise American manufacturing, impose tariffs on foreign goods, and withdraw support for electric vehicle (EV) mandates, Trump outlined policies that, if enacted, could strike a devastating blow to Ontario’s economy. While the proposed 25% tariffs on Canadian imports are sweeping, the speech suggests that Trump might adopt a targeted approach—focusing on industries he highlighted—with Ontario squarely in the crosshairs.

Ontario: The Heart of Canada’s Manufacturing and Automotive Sectors

Ontario is Canada’s economic engine, particularly in manufacturing and automotive production. The province is home to over half of Canada’s manufacturing output, contributing more than $86 billion annually to Canada’s manufacturing GDP. This sector employs approximately 777,800 people, making it one of the largest employers in the province and a cornerstone of Ontario’s economy. Manufacturing hubs such as Toronto, Windsor, and Hamilton are integral to producing machinery, chemicals, and consumer goods that are exported worldwide.

The automotive industry is a jewel in Ontario’s economic crown. It accounts for 80% of Canada’s total automotive output, directly employing more than 104,000 workers and generating $13.9 billion annually in GDP. Major automakers, including Ford, General Motors, Stellantis, Toyota, and Honda, operate assembly plants in the province, supported by a vast network of suppliers and parts manufacturers. Ontario’s automotive ecosystem is also transitioning into the electric vehicle (EV) market, with new investments in battery production and EV assembly plants in cities like Windsor and Oshawa.

Ontario’s economy is deeply intertwined with the United States, with nearly 50% of its manufactured goods exports destined for U.S. markets. The province’s proximity to key American states, combined with its integrated supply chains, has made it a critical player in North America’s manufacturing and automotive sectors. However, this reliance on cross-border trade also leaves Ontario vulnerable to disruptions, such as tariffs or changes in U.S. trade policy.

Trump’s vision of bolstering domestic production and imposing tariffs on foreign goods could specifically target vehicles, auto parts, and manufactured goods—all crucial to Ontario’s economy. A 25% tariff on Canadian automotive exports would significantly reduce Ontario’s competitiveness, potentially leading to plant closures, job losses, and a weakened provincial GDP. Additionally, the integrated nature of supply chains means that disruptions would ripple across industries, affecting not just manufacturers but also logistics, retail, and other related sectors.

Historical Lessons and Proactive Strategies for Ontario

In the absence of a strong national leader on this file, Premier Doug Ford has stepped up to defend Ontario’s interests. Recognising the economic threat posed by Trump’s trade policies, Ford has taken a strong stance, proposing measures such as removing U.S. alcohol from LCBO shelves, restricting electricity exports to U.S. states, and limiting critical mineral exports essential for EV production. However, the path forward requires not just reactionary measures but also a strategic approach informed by history.

President William McKinley, whom Donald Trump admires, implemented protectionist tariffs in the late 19th century. While these policies initially supported some domestic industries, they provoked backlash from consumers and trade partners. Domestic dissatisfaction over rising costs led to political losses for McKinley’s party, and retaliatory trade barriers further disrupted global trade flows. Ultimately, McKinley pivoted toward reciprocal trade agreements, using tariffs as negotiation tools to secure mutual benefits.

Drawing on these lessons, Ford can take a proactive approach by focusing on solutions that protect Ontario’s economy while fostering collaboration and mitigating fallout:

  • Engaging U.S. Stakeholders: Ford can build coalitions with American consumers, industries, and politicians who would also feel the impact of Trump’s tariffs. Highlighting shared consequences—such as higher prices for U.S. goods and disrupted supply chains—could generate internal pressure within the U.S. to reconsider.
  • Mitigating Domestic Fallout: To protect Ontario’s industries and consumers from potential retaliation, the province could introduce targeted subsidies or tax relief for sectors most affected by the tariffs. This would help maintain economic stability and public support.
  • Leveraging Reciprocity: Ontario’s critical exports, such as electricity and minerals, could be used as bargaining tools in negotiations. Rather than enacting purely punitive measures, these resources could be strategically employed to secure favourable trade terms.
  • Diversifying Export Markets: Ford can accelerate efforts to reduce Ontario’s reliance on U.S. markets by fostering trade relationships with Europe, Asia, and Latin America. Expanding market access would strengthen Ontario’s resilience against future trade disruptions.

Ontario’s strategic assets—from its critical minerals to its pivotal role in North American energy and manufacturing supply chains—provide significant leverage. By focusing on areas of mutual dependency and adopting a forward-looking strategy, Ford can amplify Ontario’s influence in this David vs. Goliath scenario.

This critical moment presents an opportunity for Ontario to demonstrate leadership and resilience. Informed by historical insights and guided by strategic vision, Ford’s approach can turn these challenges into a chance to strengthen Ontario’s economic foundations and safeguard its future prosperity.

How Rise Up Strategies Can Help

If your business is concerned about the potential impact of U.S. trade policies, Rise Up Strategies can help you navigate these challenges. We specialise in identifying risks, developing mitigation strategies, and positioning your business for success in uncertain times. Whether it’s diversifying your markets, leveraging your unique strengths, or building coalitions to advocate for your interests, we’re here to support you.

Speak with Rise Up Strategies today to learn what you can do to safeguard your business and thrive despite these challenges.