The hidden costs of tariffs and unemployment on Canada’s mental health

Oct 20, 2025

As U.S. tariffs on Canadian goods take hold, they will cease to be percentages and threats. Tariffs have real impact on our real lives. In some sectors, it’s happening already. As Canada braces for economic shocks, part of being ready is knowing that, along with jobs and businesses, our mental health is also on the line.  

History and research have shown that jobs and businesses aren’t the only casualties when the economy falters. Take the COVID-19 pandemic and the 2008 recession, for example, when surging unemployment was followed by rising rates of anxiety, depression, and substance use.  

You don’t have to lose your job to experience the effects either. Worrying about unemployment and how to afford food or pay the bills can cause chronic stress. Then, if we find ourselves without a job, the stress can take an even more serious toll on our mental health.  

The rates of mental illness and substance use health problems in Canada are high already. At the same time, care is often hard to get. That’s because mental health care isn’t part of our universal healthcare system, and it’s out of reach financially for many people. 

It’s a vicious cycle: Losing a job can lead to mental distress which in turn can lead to mental health and substance use health problems. And, if you’re unemployed, how can you afford the high cost of care? Or groceries for that matter? And even if you manage to recover and can work, the deck is stacked against you. You might be overlooked for jobs or judged unfairly due to gaps in jour job history.  

In the State of Mental Health in Canada, we found that that only 50% of people with mental health disabilities are employed, meaning half remain outside the workforce. These people often rely on income supports that don’t even cover the cost of living, keeping them in poverty. 

We can prevent mental health from becoming collateral damage in a trade war, but not if we stand still on mental health care and employment supports. We need to make mental health care available to all, and we need supports to keep people employed and to get people back to work. We also need employment policies that address mental health discrimination.  

Workplaces can support employee mental health  

Workplaces can enhance overall employee wellbeing by creating psychologically safe environments and providing access to mental health supports. During times of economic uncertainty, it’s even more critical for workplaces to step up. Providing comprehensive mental health and substance use health supports for all employees and fostering a culture of openness, empathy, and trust are essential.  

A culture of openess includes practicing radical transparency about organizational changes, creating psychologically safe spaces where employees can speak openly about their concerns, and listening with genuine empathy. And employers should ensure that mental health supports are readily available, encourage staff to take wellness days, and continue investing in employee development and wellbeing. By upholding organizational values, supporting diverse groups, and managing workforce transitions fairly and strategically, organizations can help employees feel valued, supported, and resilient through challenging times. Only then will everyone have a fair chance. Not just to work, but to thrive. 

Need a place to start? We’ve got you covered. 

• Reach out to your local CMHA to explore workplace psychological health and safety training options.
• Find out more about Not Myself Today, a CMHA National subscription-based program that helps employers build mentally healthier workplaces. Not Myself Today offers a comprehensive library of tools and resources for all employees, interactive eLearning for people managers, and powerful data and analytics.  

Government has a critical role to play too, and not just in addressing the tariffs  

While workplaces have a pivotal role to play in supporting the mental health of people across Canada, employers alone can’t head off the crisis. We’re already facing a mental health crisis in Canada and economic insecurity is adding to the strain. We may now be on the verge of a mental health emergency. But we can get ahead of it.  

Here’s how Canada’s federal government can help:  

• Include mental health care in the Canada Health Act.  
• Provide emergency mental health funding, and employment and income supports to affected industries and populations. 
• Invest in accessible, community-based mental health and substance use health services like those delivered by CMHAs across Canada. 

References 

Arena, A. F., Mobbs, S., Sanatkar, S., Williams, D., Collins, D., Harris, M., Harvey, S. B., & Deady, M. (2023). Mental health and unemployment: A systematic review and meta-analysis of interventions to improve depression and anxiety outcomes. Journal of Affective Disorders, 335.  

Frasquilho, D., Matos, M. G., Salonna, F., Guerreiro, D., Storti, C. C., Gaspar, T., & Caldas-de-Almeida, J. M. (2015). Mental health outcomes in times of economic recession: a systematic literature review. BMC public health, 16(1).  

Sinyor, M., Silverman, M., Pirkis, J., & Hawton, K. (2024). The effect of economic downturn, financial hardship, unemployment, and relevant government responses on suicide. The Lancet Public Health, 9(10), e802 – e806. 

Wilson, H., & Finch, D. (2021). Unemployment and mental health. The Health Foundation.