A KPMG survey of 275 manufacturers found that 42% have already moved production to the United States or are considering doing so to cope with ongoing trade uncertainty and increasing competitive pressure. 57% of manufacturers have postponed, reduced, or canceled capital investments due to concerns about trade uncertainty and competitiveness.
While the majority of manufacturers (80%) plan to retain their headquarters in Canada, 11% plan to move their headquarters to the United States within the next five years. Although this percentage may seem small, manufacturing accounts for more than 10% of Canada's GDP, so even this small percentage could have a significant impact on the economy.
Furthermore, the survey shows that manufacturers remain highly dependent on the U.S. market, with 61% of respondents saying they would not be able to survive without it. 86% of manufacturers export goods outside Canada, and among exporters, 96% said their products comply with the USMCA (United States-Mexico-Canada Agreement), meaning they are not subject to tariffs.
This survey comes at a time of increasing discussion surrounding the USMCA. Anamika Gadia, a partner at KPMG Canada’s Industrial Markets, said the Canadian government’s policy actions on overall competitiveness, taxation, regulation and trade will determine whether future manufacturing investments will remain in Canada.
