Import penetration into the manufacturing sector

In 2025, import penetration in the Canadian manufacturing sector is expected to have decreased slightly as domestic demand is set to outpace rising imports. US tariffs on Canadian exports have them less appealing to US consumers, contributing to an increase in net imports for the manufacturing sector. The trade dispute has also contributed to an increase in support for domestic goods, with Canadian leaders proposing a "Buy Canadian" policy for steel and aluminum for government-funded infrastructure spending and defense procurement, for example. The broader global economic landscape, including currency fluctuations, has also continued to shape import dynamics. This has included a sustained surge in Chinese export capacity, heightening Canadian manufacturers' import competition. Quebec and Ontario endure elevated import competition due to their concentrations of manufacturing industries. These provinces remain critical in understanding regional differences in import penetration trends.

Import penetration into the sector has seen an overall decrease from 2020 to 2025. This period began with the COVID-19 pandemic, which heavily disrupted global supply chains and elevated demand for domestically produced goods as reliance on imports was reconsidered. The manufacturing sector, having grappled with persistent high tax and regulatory burdens along with labor shortages since the early 2000s, received some relief through renewed focus on domestic production capabilities. Concurrently, changes in consumer preferences began favoring locally produced goods, diminishing import reliance.

The domestic manufacturing landscape has been undergoing strategic shifts aimed at diversification. By bolstering specific manufacturing segments to cater to local demand, reliance on imported goods has slightly lessened. The integration of automation and advanced technologies has helped alleviate some skills shortages, although challenges persist. Additionally, the macroeconomic environment contributed to these transitions. Trade policies, currency strengths, and evolving consumer trends have interacted to not only shape current import penetration rates but also indicate a potential stabilization in trends going forward.