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Federal Government Announces Counter-Tariffs and $7.5 Billion Support Package for Canadian Workers and Businesses
Date: August 26, 2026
On August 25, 2026, the federal government announced approximately $27.6 billion in counter-tariffs on U.S. goods and a $7.5 billion support package for Canadian workers and businesses affected by tariff-related economic disruption.
This announcement is significant for employers as the government has introduced expanded Employment Insurance (EI) measures, a new Workforce Retention and Retraining Program, enhanced liquidity supports for businesses, and new funding intended to help organizations retain employees, manage cash-flow pressures, and adapt to evolving market conditions.
Although important eligibility and implementation details remain outstanding, for employers operating in tariff-exposed sectors, the measures provide an early indication of the federal government’s intention to support workforce retention, retraining and business continuity while organizations assess the impact of the new tariff environment.
Canada Announces $27.6 Billion in Counter-Tariffs
Effective September 8, 2026, Canada will impose approximately $27.6 billion in counter-tariffs on selected U.S. products. According to Finance Minister François-Philippe Champagne, the measures are intended to match the value of the recently announced U.S. tariffs on Canadian goods on a “dollar-for-dollar, rate-for-rate” basis.
The counter-tariffs will focus on sectors most affected by the U.S. measures, including steel, dairy, appliances, agricultural equipment, pulp and paper, and electronics. Government officials have stated that, where possible, affected products were selected because Canadian alternatives are available.
Canada Announces $7.5 Billion in New Supports for Workers and Businesses
Alongside the counter-tariffs, the federal government announced a $7.5 billion support package intended to help workers and businesses respond to tariff-related economic pressures. The support package builds on approximately $25 billion in tariff-related support measures previously announced by the federal government and includes three principal categories of support:
Expanded Employment Insurance Measures
The federal government has announced several extensions to temporary EI measures introduced in response to earlier tariff-related disruption. Specifically, the government will:
- extend the waiver of the one-week EI waiting period
- continue allowing workers to receive EI benefits without first exhausting certain separation-related payments until October 10, 2027
- continue enhanced support for long-tenured workers through up to 20 additional weeks of EI benefits until June 2027
The federal government has also introduced a temporary measure that will allow certain workers who voluntarily left employment in recent months to access EI benefits where their most recent job loss occurred through no fault of their own. Additional eligibility and implementation details have not yet been released.
A New Workforce Retention and Retraining Program
The federal government is also introducing a new Workforce Retention and Retraining Program. The program will combine the existing EI Work-Sharing Program and Worker Retention Grant into a single offering that is intended to be easier for employers to access. According to the government, the program will support existing and enhanced work-sharing flexibilities while providing employers with funding of up to $1,000 per participant to help offset training and administrative costs associated with workforce retention and retraining initiatives. Additional details regarding eligibility and program administration have not yet been released.
For employers facing temporary reductions in demand, work-sharing arrangements may provide an alternative to layoffs by allowing employees to work reduced hours while receiving partial EI benefits. The government’s focus appears to be on helping employers retain and retrain workers through periods of reduced business activity rather than immediately reducing headcount.
Financing and Diversification Funding for Businesses
Supports for Small and Medium-Sized Businesses
The federal government also announced several measures intended to assist small and medium-sized enterprises (SMEs) facing tariff-related pressures.
Beginning in September 2026, the government will increase funding for the Regional Tariff Response Initiative by $1.5 billion. Delivered through Canada’s Regional Development Agencies, the program is intended to help SMEs respond to tariff pressures, adapt their operations and address liquidity challenges.
As part of the expansion:
- the maximum non-repayable contribution available under the program will increase from $1 million to $3 million
- businesses may access liquidity support of up to $2 million for demonstrated liquidity needs
Additional eligibility and application details for this initiative have not yet been released.
The federal government has also announced a second $500 million liquidity stream through the Business Development Bank of Canada’s (BDC) Pivot to Grow Program. The new funding is intended to provide working capital to businesses experiencing tariff-related cash-flow pressures. Businesses directly affected by tariffs, regardless of sector, may be eligible for loans ranging from $250,000 to $5 million, with interest-only payments available for up to 36 months. The government has also indicated that the application process will be simplified and that eligibility for BDC’s direct tariff-support programs will be expanded by lowering annual revenue requirements for applicants to $1 million, potentially allowing more businesses to access available funding.
Supports for Businesses Pursuing Growth and Diversification
The federal government is also investing $2 billion in a new Canada Strong Diversification Fund (Fund). Established as a new stream of the Strategic Response Fund, the Fund is intended to support tariff-impacted businesses pursuing capital investments, operational improvements and diversification projects.
According to the government, the Fund will support businesses with shovel-ready projects, including projects involving ongoing capital maintenance and modernization. The Fund will be available to medium-sized businesses, in addition to larger enterprises, and is intended to help organizations strengthen competitiveness, pursue growth opportunities, and reduce reliance on tariff-affected markets and supply chains.
To accelerate access to funding, the federal government has also announced a fast-track review and approval process, with project intake and triage to be coordinated through Canada’s Regional Development Agencies.
While the government has identified the types of projects it intends to support, additional details regarding eligibility criteria and application requirements have not yet been released.
Practical Considerations for Employers
While additional details with respect to the various support measures are expected, employers may wish to begin considering how these measures could fit into their workforce planning, which may include the following:
- Consider alternatives to layoffs. Employers experiencing temporary reductions in work may wish to evaluate whether work-sharing, employee-retention funding and retraining supports could help preserve employment relationships while business conditions remain uncertain.
- Review workforce transition plans. The extension of EI measures, including continued access to EI benefits before exhausting certain separation-related payments and additional EI entitlement for long-tenured workers, may affect workforce transition planning where workforce reductions become necessary.
- Assess retraining opportunities. Employers anticipating operational changes may wish to consider whether available funding can assist with developing employee skills that support future business needs.
- Review funding eligibility. Organizations facing tariff-related disruption should evaluate whether they may qualify for the Regional Tariff Response Initiative, BDC liquidity supports or the Canada Strong Diversification Fund once further details become available.
Employers considering temporary layoffs, work-sharing arrangements, workforce reductions or other operational changes should ensure they understand the employment and labour implications of those decisions. For a more detailed discussion of workforce planning considerations arising from tariff-related disruption, visit our U.S. Tariffs Resource Hub.
Key Takeaway
Against this backdrop, the government’s message is clear: before reducing headcount, employers should consider whether available retention, retraining, work-sharing and funding programs can help bridge a period of reduced business activity. Expanded EI measures, the new Workforce Retention and Retraining Program, enhanced liquidity supports and business diversification initiatives are intended to help employers retain employees, support retraining, maintain operations and navigate temporary economic disruption.
As additional details regarding program eligibility and application requirements become available, employers should assess whether these initiatives may provide practical alternatives to workforce reductions and support broader business-continuity objectives.
If you have questions about how these measures may apply to your organization, including workforce planning, work-sharing arrangements, employee terminations, restructuring initiatives or eligibility for available support programs, please contact your Hicks Morley lawyer.
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