Survey Reveals Canadian Manufacturers Eyeing U.S. Relocation Amid Economic Pressures
Forty-two percent of Canadian manufacturers are contemplating moving production to the U.S., signaling a potential crisis for the sector. A KPMG survey indicates that 57 percent of these companies have halted or scaled back capital investments in Canada, raising concerns about the viability of local manufacturing.
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A KPMG survey indicates that 42% of Canadian manufacturers are considering relocating production to the U.S. or have already begun this process. In 2024, Ontario's auto sector accounted for 84.6% of national employment, yet it is heavily reliant on U.S. markets, with over 90% of vehicles exported to the U.S. and 125,000 jobs threatened by tariffs.
Manufacturing sales in Ontario dropped by 2.1% in Q1 2026, indicating a declining sector impacted by auto retooling. The Canadian government plans to invest in a Defense Industrial Strategy aimed at bolstering domestic manufacturing and reducing reliance on foreign supply chains.
This initiative includes a focus on high-tech production and aims to utilize existing capabilities in regions like Southwestern Ontario. The success of this strategy will hinge on effective procurement and the growth of domestic contracts by 2027.
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