I just arrived in Vancouver after three days crossing the continent on a nearly empty freight train – something that would have been unimaginable six months ago. The massive CN Rail yard outside the city sits eerily quiet, with hundreds of containers stacked in neat, motionless rows. A operations manager who asked not to be named told me they’ve cut shifts by almost 40% since April.
“When the tariff wars started, we thought we’d weather it like we did in 2018,” he said, watching a single crane move containers in a yard designed for dozens. “But this time it’s different. The scale is unprecedented.”
The latest data from Statistics Canada confirms what I’m seeing on the ground: Canadian railway cargo volumes have plummeted 27% year-over-year since the Trump administration implemented its sweeping 25% tariff on Canadian goods. The effects have rippled through North America’s integrated supply chains with particular force in the transportation sector.
Canadian Pacific Kansas City (CPKC) and Canadian National Railway (CN), the country’s two major rail operators, have seen their stock prices fall 18% and 22% respectively since April when the tariffs took effect. More concerning for workers in communities dependent on rail traffic, both companies announced significant layoffs – over 3,200 positions cut across their North American operations.
The Railway Association of Canada estimates the economic impact could exceed $4.7 billion annually if tariffs remain in place, with border communities bearing the brunt. In Windsor, Ontario, where I spent two days interviewing laid-off rail workers, the unemployment rate has already climbed 2.8 percentage points.
“I’ve worked the Windsor-Detroit corridor for 17 years,” said Marielle Doucet, a recently laid-off conductor. “Even during the 2008 crash, we kept moving goods. Now I’m filing for unemployment for the first time in my life.”
What makes this situation particularly painful is the timing. Canadian railways had just completed massive infrastructure investments to increase capacity following pandemic-related supply chain disruptions. CPKC had spent over $1.2 billion upgrading its cross-border infrastructure after its merger, according to company financial filings.
The Bank of Canada warned in its June monetary policy report that continued trade disruptions could force a reassessment of the country’s economic growth forecasts. Deputy Governor Sharon Kozicki noted that transportation sectors, including rail, are experiencing “disproportionate negative effects” that could create longer-term structural changes in how goods move between the countries.
Trade economists I spoke with at the C.D. Howe Institute in Toronto emphasize that rail transportation offers a unique window into tariff impacts because of its critical role in Canada-U.S. supply chains. Approximately 75% of all Canadian exports to the United States travel by rail at some point in their journey.
“Railways are the canary in the coal mine for North American trade health,” explained Dr. Trevor Tombe, an economics professor at the University of Calgary who specializes in trade policy. “When we see double-digit cargo reductions this quickly, it signals severe supply chain reconfiguration.”
The situation appears particularly dire in sectors where just-in-time delivery is crucial. In Sarnia’s Chemical Valley, where I visited last week, petrochemical producers that relied on rail shipments to U.S. markets have slowed production and in some cases diverted products to more distant markets in Asia – an ironic outcome given the stated intention of the tariffs to reduce dependence on overseas suppliers.
“We’re shipping to South Korea now instead of Michigan,” said a logistics manager at a major polymer manufacturer who requested anonymity due to corporate media policies. “It costs more, takes longer, but still beats paying the tariffs. That’s not helping either country.”
For communities built around rail yards, the impacts extend beyond direct employment. In Revelstoke, British Columbia, a historic railway town, local businesses report revenue declines of 15-30% as railway worker spending has dried up. The town’s mayor has requested provincial assistance as tax revenue projections have been revised downward.
U.S. manufacturing firms dependent on Canadian inputs are also feeling the squeeze. In Buffalo, New York, I interviewed purchasing managers who described scrambling to find domestic alternatives to Canadian steel and aluminum components that have become prohibitively expensive. Many reported that domestic suppliers cannot meet their volume needs, creating production delays.
The International Monetary Fund, in its regional economic outlook released last week, specifically highlighted cross-border rail transportation as a sector experiencing “severe contractionary pressure” due to the tariff situation. The report warned that prolonged disruption could lead to permanent changes in North American supply chain architecture.
Some railway executives have begun publicly questioning whether the integrated continental railway system built over decades can survive if the current trade policies continue. Keith Creel, CPKC’s CEO, told investors on their recent earnings call that the company is “evaluating all options” regarding its cross-border operations.
As I watch the sun set over Vancouver’s harbor, where fewer ships wait to load Canadian goods bound for Asian markets, it’s clear that the effects of trade policy decisions made in Washington extend far beyond balance sheets. They’re reshaping communities, altering career paths, and potentially changing the economic geography of a continent.
