A new survey published by KPMG has found four in 10 Canadian manufacturers have either moved their production to the US or are considering a relocation south of their border.
The survey of 275 Canadian manufacturers found 57% of respondents either paused, reduced, or cancelled capital expenditure projects due to economic uncertainty and trade and tariff threats, while 42% scaled back or paused research and development spending. More than half (52%) say they are currently operating in “endurance mode.”
Among companies that have moved some or all operations to the US, the top reasons cited by respondents for moving are avoiding or reducing high import tariffs, ongoing trade uncertainty, lower operating costs, a more favorable tax environment, and the ability to better integrate and optimize supply chains.
While most manufacturers (80%) are planning to keep their headquarters in Canada, 11% plan to move their headquarters to the US within the next five years. According to Anamika Gadia, partner and national leader of industrial markets at KPMG Canada, that could have a meaningful impact on the economy.
“The greater risk isn’t where companies are today, but where future investment decisions are being made,” said Gadia. “Many manufacturers are pausing Canadian investments and reassessing where future growth and production capacity should be located.”
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