Donald Trump’s trade war is taking a bite out of Canada’s manufacturing sector.
Canadian manufacturing just had its worst month since the height of the global COVID-19 pandemic, according to an index that measures output and new orders. Many manufacturers also laid off employees as a result of the trade war sparked by the U.S. president’s tariffs.
In April, the S&P Global Canada Manufacturing Purchasing Managers’ Index slumped to 45.3 points, the third straight month it’s dropped and the lowest it’s been since May 2020.
“The uncertainty regarding the future direction and implementation of tariffs was again especially damaging,” said Paul Smith, economics director at S&P Global Market Intelligence.
The industry, added Smith, was filled with “hesitancy and delayed decision-making.”
Manufacturers also faced snarled ports and increased prices, said Smith, as supply chains reacted to the impact of Trump’s tariffs.
The report comes as little surprise to manufacturing industry insiders.
In Washington, D.C., last week, manufacturing and export industry leaders from Canada, the U.S. and Mexico were commiserating over the trade uncertainty, said Dennis Darby, president of Canadian Manufacturers and Exporters.
Tariffs are hurting the economy, but so is the on-again, off-again nature of Trump’s continuing threats, said Darby. Even companies that are considering shifting production to the U.S. don’t want to make any snap decisions.
“Everybody’s sitting on their hands. Nobody wants to make a long-term decision until we understand what the U.S. president quote-unquote wants,” said Darby.
“We’ve already seen some pretty devastating impacts, and we’re only six weeks in,” said Catherine Cobden, CEO of the Canadian Steel Producers Association. “It’s only going to get worse.”
On March 12, Trump imposed 25 per cent tariffs on all aluminum and steel imports to the U.S.
The impact was almost immediate, Cobden said.
“There have been hundreds of layoffs, there have been production cutbacks.”
Several steel companies also laid off workers as a result of Trump’s tariffs, including Canada Metal Processing Group and some at Algoma Steel.
In the automotive sector, thousands of workers were laid off as a result of Stellantis’s decision to take a two-week production “pause” at its assembly plant in Windsor, Ont., with some estimates putting the hit at 12,000 jobs.
Earlier this week, Stellantis announced that first-quarter revenues were down 14 per cent compared with this time last year, and said that the company won’t be making any financial forecasts for the rest of the year, citing trade-related uncertainty.
“The company is suspending its 2025 financial guidance due to tariff-related uncertainties,” Stellantis said.
Several reports also said the company is shifting some production to the U.S. from Mexico in response to the tariffs.
The company didn’t specifically mention Mexico or Canada in its report, but acknowledged it was taking a look at its production and supply chain as a result of the tariffs.
“Management is taking action to adjust production plans, and identifying opportunities for improved sourcing,” the company said.
Still, despite the uncertainty, Darby is optimistic that the trade war eventually will end because of a simple reality: the American economy needs its neighbours.
“The U.S. needs our capacity. I mean, don’t listen to what the president says, they actually need the capacity that Canada and Mexico provide in order for them to satisfy that huge consumer demand in the U.S.,” said Darby.
Eventually, Darby added, that will mean growing demand for skilled-trade workers in the manufacturing sector, even if it doesn’t seem like it right now.
According to a new report from CME, there are 22,000 Canadian manufacturing workers expected to retire annually for the next seven or eight years, Darby noted.
Even if a workable trade agreement with the U.S. isn’t around the corner, there will still be plenty of jobs as Canadian exporters seek out new markets, Darby said.
“This isn’t time to take our foot off the gas pedal. We really need to make sure we have enough people trained in the skilled trades. Some places are still hiring, even now,” said Darby.
