Trump’s tariffs begin to bite…

…but that’s not all

By Jayson Myers

The Trump administration’s tariffs are taking a chunk out of manufacturers’ exports, sales, and new orders across the Prairies, and right across Canada this year. But the news is not all bad. Tariff impacts on exports to the United States are being offset by the growth of exports to other countries as well as by a pick-up in domestic sales. What is more concerning is the longer-term deterioration in manufacturing sales performance that has occurred since 2022, suggesting that much bigger and significant challenges than US tariffs lie ahead for both Prairie and Canadian manufacturers.

Sales declining across Canada

The value of goods sold by Canadian manufacturers between January and August* this year dropped to $562.3 billion, down 1.0 per cent from $567.8 billion during the same period in 2024. After taking price changes into account, manufacturers’ sales calculated in 2017 dollars are down 3.3 per cent from a year ago. New orders have also declined in 2025, by 0.2 per cent in current dollar terms and by 1.7 per cent in 2017 dollars when compared to the first eight months of last year.

* Note to reader: August is the last month for which statistics were available when this column was written in early November.

While these are significant losses, they are surprisingly small. Two factors explain that. First off, many of Canada’s manufactured exports to the United States still enter that country tariff-free under the Canada-United States-Mexico Agreement (CUSMA). But, more importantly, a decline in exports to the US is being offset by an increase in sales to other customers in Canada and abroad. 

Canada exported $213.9 billion in manufactured goods to the United States between January and July 2025 (again the last month for which statistics are available). That is a decline of $7.9 billion or 3.5 per cent from the same period last year. On the other hand, sales within Canada are up 1.0 per cent while export sales to countries other than the United States are 6.4 per cent higher than in 2024. The most dramatic increase in sales has been to Germany where Canadian manufactured exports have shot up by more than 35 per cent over the past year.

What is of far greater concern for Canada’s manufacturing sector is that the decline in sales in 2025 is only part of a deterioration is sales performance that has taken place since 2022. Sales jumped 18.6 per cent in both 2021 and 2022 in the aftermath of COVID. They rose by a meagre 0.6 per cent in 2023 and fell by 1.7 per cent last year. This year’s decline is actually smaller than that recorded in 2024.

Slight sales dip in Manitoba

Market diversification has been an important factor for Manitoba manufacturers in compensating for their loss of exports to the United States. Overall sales are down by only 0.8 per cent to $18 billion for the first eight months of 2025 despite a 9.8 per cent decline in exports to the United States. In contrast, exports to other countries have grown by 9.0 per cent led by double-digit export growth to Mexico, Taiwan, Singapore, Spain, and Japan. Sales within Canada have also increased significantly this year, by more than 5.9 per cent on a year-over-year basis.

However, a similarly worrying long-term trend is apparent for Manitoba manufacturers as for the sector across the country. Following robust growth of 14.5 per cent in 2021 and 19.1 per cent in 2022, sales growth decelerated to 4.9 per cent in 2023 and only 1.0 per cent in 2024 before dipping into negative territory this year.

Other markets unable to offset decline in Saskatchewan

While Saskatchewan manufacturers are actively diversifying their markets as well, they have been unable to keep up with the loss of demand south of the border. Overall sales of manufactured goods amounted to $14 billion over the period from January to August this year, a 5.8 per cent decline from 2024.

The positive news for Saskatchewan manufacturers is that domestic sales have increased by 6.6 per cent in 2025. And export sales to other countries have jumped by a full 12.8 per cent, with double digit growth recorded in exports to the United Kingdom, Indonesia, Mexico, South Korea, and Peru. However, while exports to the United States represented only 39 per cent of manufacturing output in Saskatchewan in 2024—a relatively low level of dependence compared with other parts of Canada—the growth of demand in other markets has not been able to compensate for a 27.1 per cent decline in sales south of the border. Saskatchewan is particularly vulnerable to US tariffs imposed on imports of steel and steel products.

The longer-term deterioration in manufacturing sales performance is again evident in Saskatchewan. Manufacturing sales jumped by 33.1 per cent in 2021 and again by 24.1 per cent in 2022. But sales dropped by 6.2 per cent in 2023 and by another 6.5 per cent in 2024. This year’s decline has actually not been as bad as that recorded in the previous two years!

Sales down across for board in Alberta

Alberta manufacturers are recording lower sales in both domestic and export markets. Their total sales dropped by 2.5 per cent over the past year to $67 billion for the period from January to August. A 6.8 per cent decline in exports to the United States accounts for most of that loss. However, domestic sales are also down by about 0.4 per cent, and, despite strong export growth to South Korea, Panama, UAE, Netherlands, and Australia, the overall value of sales to other countries apart from the USA has fallen by 3.9 per cent.

Alberta is also experiencing a pronounced deterioration in manufacturing sales performance. Sales zoomed up by a full 35.5 per cent in 2021 and by another 25.3 per cent in 2022. But they fell by 5.2 per cent in 2023 and by another 0.7 per cent last year. This year’s decline compounds a three-year loss.

Prairie trends reflect broader challenges

Alberta accounts for approximately two-thirds of prairie manufacturing sales, Manitoba for another 18 per cent and Saskatchewan for 14 per cent of the total. So, the story for Prairie manufacturing, as a whole, in 2025 reflects a more serious situation when it comes to market diversification than is the case in either Manitoba or Saskatchewan, or in fact across Canada.

Prairie manufacturing has been hit harder by the Trump administration’s tariffs than the rest of Canada. Across the Prairies, manufacturing sales are down by 2.7 per cent this year. Exports to the United States have fallen by 10.8 per cent. Meanwhile, sales to other export markets are 1.1 per cent higher, and domestic sales are up by 1.5 per cent. 

The Prairies have also seen a more pronounced deterioration in manufacturing sales over the past three years than the rest of the country. Based on results from the first eight months of this year, the overall value of manufacturing sales across the Prairies is likely to be 7.5 per cent lower in 2025 than in 2022. That contrasts with a 2.1 per cent decline in overall manufacturing sales for Canada over the past three years.

The loss in manufacturing sales since 2022 cannot be attributed only to US tariffs. It is also closely tied to a downturn in the rate of manufacturing investment in Canada over that same period. It’s a strong and very worrying indicator of a deterioration in the competitiveness of Canadian and Prairie manufacturers, and of Canada as a location for companies to locate, invest, and grow. 

Jayson Myers is CEO of Next Generation Manufacturing Canada – the country’s Global Innovation Cluster for advanced manufacturing. An award-winning business economist and leading authority on technological change, Myers has counselled Canadian prime ministers and premiers, as well as senior corporate executives and policymakers around the world.