Ogletree Deakins | Canada Announces $7.5 Billion Support Package for Tariff-Affected Employers

On August 25, 2026, the Canadian federal government announced a $7.5 billion package of new and enhanced measures to support workers and businesses impacted by the latest round of U.S. tariffs. This builds on nearly $25 billion in supports rolled out over the past eighteen months. For employers with Canadian operations, several of these measures have immediate workforce planning implications.

Quick Hits

• On August 25, 2026, Canada announced new support programs to help employers impacted by the latest round of U.S. tariffs retain workers, fund training, and avoid layoffs.
• Extended Employment Insurance (EI) measures allow laid-off or separated employees to access benefits sooner and alongside severance payments.
• Employers may want to assess eligibility for workforce, EI, and financial support programs when planning staffing or separation decisions.

Here is a summary of what matters most.

The New Workforce Retention and Retraining Program

The government is consolidating the existing Employment Insurance (EI) Work-Sharing program and the Worker Retention Grant into a single, streamlined Workforce Retention and Retraining Program (WRRP). This is significant for employers looking to avoid layoffs while managing reduced business activity. Key features include:

• Work-Sharing flexibilities continue. Employers experiencing a decline in business activity attributable to tariffs can reduce employee hours rather than resorting to layoffs, with affected employees receiving EI benefits for hours not worked.
• Training funding. Employers participating in the program will be eligible for up to $1,000 per participant to cover training and administrative costs during reduced work periods.
• Broader eligibility. The program now extends to nonprofit and charitable organizations experiencing revenue declines as a direct or indirect result of tariffs, not just private-sector employers.

Since Work-Sharing applications roughly doubled in 2025, with approximately 80 percent citing tariffs, this expanded program signals the government’s expectation that workforce disruptions will continue.

Extended Employment Insurance Flexibilities

The government is extending three temporary EI measures that directly affect how employees transition off an employer’s payroll:

• Waived one-week EI waiting period. This was extended by one additional year, allowing separated or laid-off employees to receive benefits from day one of their claim.
• Separation pay treatment. The usual requirement for workers to exhaust severance and other separation payments before accessing EI remains suspended for another year, meaning employees who receive severance packages can access EI benefits concurrently.
• Additional twenty weeks for long-tenured workers. This measure, which provides extra regular EI benefits for workers with extended employment histories, has been extended by eight months.

These measures are relevant for employers structuring severance and separation packages, as employees now face fewer gaps between employment and benefits.

Financial Support for Employers

• Small and Medium-Sized Enterprises (SMEs): The Regional Tariff Response Initiative is receiving an additional $1.5 billion, with the cap on nonrepayable contributions increasing to $3 million.
• Large Employers: The $10 billion Large Enterprise Tariff Loan facility now offers up to thirty-six months of liquidity support with loan terms extended to fifteen years.

What Can Employers Do Now?

Employers affected by the U.S. tariffs may want to consider the following steps:

Assessing whether Work-Sharing applies to one’s workforce. For employers whose operations have been directly or indirectly affected by tariffs and are contemplating layoffs, the new WRRP may provide a viable alternative that lets them retain skilled employees while accessing government-funded training support.

Reviewing separation and severance practices. The extended EI flexibilities change the calculus for employees receiving severance. Employers may want to ensure their HR teams are aware of how these measures interact with existing separation packages.

Exploring available financial supports. Both SMEs and large enterprises now have access to enhanced funding. Employers may want to review their eligibility early, as demand for these programs has been high.