A growing number of Canadian firms are considering moving their manufacturing production to the United States due to the ongoing uncertainty surrounding a trade deal. Despite initial promises to secure a deal, 16 months have passed with no agreement in sight, leading to increased uncertainty for Canadian manufacturers. A recent survey of 275 Canadian manufacturing companies found that 42% of firms have either already moved production to the US or are considering doing so.
The survey, which included firms with annual sales ranging from $10 million to over $20 billion, revealed troubling findings. Among firms with more than $300 million in annual sales, 49% have either already shifted production south or are considering it. Additionally, 36% of firms are scaling back capital expenditures, while 12% have paused spending and another 9% have cancelled investments altogether. This uncertainty is driving investment decisions and having a significant impact on the Canadian economy.
Canada's recent jobs report showed a loss of 17,000 manufacturing jobs in June, bringing the total to 52,000 jobs lost since the current prime minister took office in March 2025. The country has lost 61,000 manufacturing jobs since January 2025, when tariff threats became a reality. The prime minister's initial claims of being able to negotiate a deal with the US president have not come to fruition, and the lack of progress is taking a toll on the economy.
The manufacturing sector is struggling to survive, with 52% of manufacturers operating in "endurance mode," simply trying to stay afloat. Without guaranteed access to the American market, Canada becomes a less attractive place to invest. The current strategy of waiting for political change in the US is not a viable solution, as it ignores the reality that both major US parties are increasingly skeptical of free trade. Leading figures in the Democratic Party have expressed skepticism toward trade liberalization, and the party's stance on free trade is unlikely to change in the near future.
The loss of manufacturing jobs and declining business investment are clear indicators that the economy is stalled. The current approach of waiting for political change in the US is not a strategy, and it is putting Canadian jobs at risk. The economy cannot afford to wait, and a new approach is needed to address the ongoing uncertainty and secure a trade deal that benefits Canada. The current situation is unsustainable, and the government must take action to support the manufacturing sector and promote economic growth.
