Question Period Note: CANADA’S MANUFACTURING SECTOR – IMPACTS OF U.S. TARIFFS

What is the Government of Canada doing to support the Canadian manufacturing sector considering U.S. tariffs?

• The Government of Canada continues to take strong action to support Canadian workers and businesses.

• The Prime Minister has announced a series a targeted and strategic measures to support the sectors most exposed to U.S. actions, while accelerating efforts to strengthen supply chain resilience and reduce vulnerability to external shocks.

• Canada is proactively charting its own path, supporting domestic production, strengthening critical sectors, and mobilizing investment to drive innovation and competitiveness during this period of global transition.

• The Government of Canada remains ready to engage with the United States to pursue a stable and predictable agreement. The Government will not rush negotiations and will take the time needed to secure the right outcome for Canadian workers and businesses.

• Canada is taking clear, steady action to protect workers and industries as U.S. tariff measures create broad global uncertainty and continue to disrupt integrated North American supply chains.

• The Government is strengthening domestic industrial capacity through strategic investments – supporting innovation, expanding productive capabilities, and building the resilient supply chains needed for long-term economic security.

• Canada is also pursuing a broader diversification strategy, deepening partnerships with reliable, like-minded economies in the EU and Indo-Pacific to expand market access, secure critical inputs, and reduce long-term vulnerability to future shocks.

• A strong and competitive manufacturing base is vital to Canada’s future prosperity. Canada is taking steps to anchor high-value production at home, support advanced manufacturing, and position firms to complete globally in an increasingly risky economic environment.

The current U.S. Administration imposed a series of tariffs against Canada. The U.S. Department of Commerce is also currently undertaking a number of national security reviews into a several additional goods, including semiconductors, pharmaceuticals, critical minerals, lumber, and medium- and heavy-duty vehicles.

The Government of Canada has responded with the following countermeasures:
• 25% tariffs on a list of steel products worth $12.6 billion and aluminum products worth $3 billion, effective as of March 13, 2025; and
• 25% tariffs on non-Canada-United States-Mexico Agreement (CUSMA) compliant US-made vehicles, and on the non-Canadian and non-Mexican content of CUSMA compliant US-made vehicles, effective as of April 9. Vehicle imports from the US totalled $35.6 billion in 2024.

The Government of Canada has introduced a range of financial and advisory supports to help Canadian businesses navigate the economic impacts of U.S. tariffs. These initiatives aim to preserve cash flow, maintain operations, and support long-term competitiveness.
• Trade Impact Program by Export Development Canada (EDC): $5 billion in financing over two years to help exporters reach new markets, manage tariff-related disruptions (e.g., losses from non-payment, cash flow issues), and adapt to currency volatility.
• Targeted loans by Business Development Bank of Canada (BDC): $500 million in favourably priced loans for companies directly targeted by U.S. tariffs or operating within their supply chains.
• Farm Credit Canada (FCC): Sectoral Financing: $1 billion in new financing to reduce financial barriers for the Canadian agriculture and food industry.
• Tax Deferrals: Temporary deferral of corporate income tax payments and GST/HST remittances from April 2 to June 30, 2025, providing up to $40 billion in liquidity to Canadian businesses.
• Large Enterprise Tariff Loan (LETL) Facility: Launched on April 15, 2025, the LETL facility is managed by the Canada Development Investment Corporation (CDEV) via the Canada Enterprise Emergency Funding Corporation (CEEFC) and provides financing to large Canadian companies.
• Strategic Response Fund: A new $5 billion fund with flexible terms to help firms in all sectors impacted by tariffs to adapt, diversify and grow.
• Buy Canadian: A new policy to ensure the federal government buys from Canadian suppliers or requires local content when domestic suppliers are unavailable. This policy will extend to all federal funding streams and Crown corporations and will provide a roadmap for provinces and municipalities to apply similar approaches to their own procurement.
• Regional Tariff Response Initiative: A $1 billion program to support small and medium-sized enterprises impacted by tariffs, across all sectors. It includes targeted support for the steel sector.
This is in addition to sector-specific measures for steel, softwood lumber, and canola and agriculture producers, as well as a waiver of the Electric vehicle Availability Standard requirement for 2026 model year vehicles.

Businesses impacted by U.S. tariffs and engaged in export activities qualify for programs and measures that seek to minimize the effects of Canada’s retaliatory tariffs on domestic businesses. This includes the duties relief program, the duty drawback program and counter-tariff remissions.

Lastly, the Government implemented several temporary measures to support Canadian workers whose employment may be impacted by the imposition of U.S. tariffs:

• Waiving the EI waiting period: Workers no longer need to wait one week before receiving EI benefits, allowing for more immediate income support.
• Suspension of separation rules: For a six-month period, EI rules requiring workers to exhaust their severance or separation pay before collecting benefits have been suspended. This enables quicker access to support following job loss.
• Eased eligibility requirements: The government has increased the applicable regional unemployment rate thresholds used to determine EI eligibility, making it easier for affected workers to qualify for benefits.
• EI Work-Sharing Program: The EI Work-Sharing Program allows employees to work reduced hours while receiving EI benefits, helping businesses retain skilled staff during temporary downturns.
On September 5, the government also announced a new reskilling package for up to 50,000 workers, in addition to added flexibility and benefits for Employment Insurance and a new digital jobs and training platform.

These measures apply to workers across sectors that have been impacted by U.S. tariffs or Canada’s countermeasures, particularly in manufacturing, automotive, and steel and aluminum-related industries.