Ontario has been seeing declines in the financial section and especially in its manufacturing industry. It's slowing Canada down, writes John IbbitsonCole Burston/The Globe and Mail
John Ibbitson is a media fellow at the Fraser Institute and a senior fellow at the Munk School of Global Affairs and Public Policy.
Ontario is the sick man of Canada.
The heartland province, with almost 40 per cent of the country’s population and economy, was a national leader in agriculture, then in manufacturing, then in services and most recently in tech.
But today’s news is mostly bad news. Although the number of farms in Canada is dropping in most jurisdictions, Ontario’s decline is above the national average (2.5 per cent between 2016 and 2021, according to Statistics Canada, compared to 1.9 per cent nationally).
Ontario projects $14.6-billion deficit in budget as it wrestles with U.S. tariffs
Although Ontario continues to dominate the financial services industry, the sector is in steady decline, relative to other financial sectors. Toronto currently ranks 23rd in the Global Financial Centres Index, down from 13th place in 2009.
But it’s in manufacturing where the real trouble lies. About half of Canada’s manufacturing jobs are located in Ontario. Although there have been years of gains and losses, overall more than 200,000 manufacturing jobs have disappeared in this century. Manufacturing, which once accounted for 18 per cent of Ontario’s economy, now accounts for only 11 per cent.
The result: Ontario now endures an unemployment rate above the national average: 7.9 per cent in May, versus 7.0 per cent nationally. And Ontario’s GDP growth consistently lags behind the national average, growing 1.2 per cent in 2024, compared to the national average of 1.6 per cent.
“One can argue that Ontario is dragging down the overall Canadian growth rate,” the Fraser Institute, a think tank, concluded in 2024.
The national equalization program was developed in the 1950s to ensure poorer provinces were able to deliver services at a level comparable to wealthier ones, such as Ontario. But Ontario started receiving equalization payments from Ottawa more than a decade ago. It received $576-million in 2024.
Justin Trudeau’s federal and Doug Ford’s provincial governments responded to Ontario’s declining economic strength with $57-billion for the automotive industry, principally to support electric vehicle manufacturing.
But interest in EVs is waning among auto buyers because of affordability concerns, lack of charging infrastructure, and the relative decline in gasoline prices.
Canadian economy shrinks slightly in April amid declines in manufacturing sector
And Donald Trump’s return as President threatens not only EV sales, but the entire Ontario manufacturing sector. Mr. Trump wants to relocate auto-industry jobs in Canada and Mexico to the United States. He wants to protect American industry with crippling tariffs.
In April, 33,000 manufacturing jobs were lost in Ontario, before the new tariff regime, whatever it ends up being, was even fully in place.
Though Prime Minister Mark Carney hopes to negotiate away most of the tariffs, some are bound to remain, because “I’m a tariff person. I’ve always been a tariff person,” as Mr. Trump put it at the June G7 summit in Kananaskis, Alta.
The Ontario government’s Financial Accountability Office predicts that the Trump tariffs could knock two percentage points of growth off Ontario’s GDP by 2029, costing 137,900 jobs.
The FAO also glumly predicts that tariffs will fuel inflation, though “this would be partially offset by the impact of weaker economic activity in Ontario and lower oil prices.”
At one level, there is little the Ontario government can do, other than wait to learn what kind of tariff regime the federal government works out with Mr. Trump’s Washington. But Ontario can also push for the greatest possible economic integration within Canada itself, to create markets for goods the province is no longer able to export to the United States.
Ontario auto production suffers as U.S. tariffs take hold
More broadly, all provincial governments need to invest in the best possible quality of education, to equip the work force to meet future economic needs, while investing also in new energy sources and improved infrastructure.
And Ontario needs to overcome a can’t-do attitude that has gripped the province in recent decades. From developing high-speed rail to upgrading other infrastructure to exploiting natural and human resources, governments prefer to study and regulate rather than put shovels in the ground.
One example: It took about two decades to turn what is now Sudbury from mostly bush into a major mining centre. More than two decades after the Ring of Fire, a rich source of minerals in Northern Ontario, was discovered, that resource remains untapped, partly the result of conflicting Indigenous positions and squabbling between Ottawa and Queen’s Park.
There is some good news. The province remains a leader in high tech, including artificial intelligence. The biotech sector is also strong.
But for the guy on the line or in the mine, things are grim and are likely to get grimmer.