Mark Carney’s trade strategy is driving manufacturers south

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As Mark Carney continues to claim that no deal is better than a bad deal, an increasing number of Canadian firms are looking to move manufacturing production south. Carney was elected on a promise to secure a trade deal with Donald Trump, yet 16 months later, there is still no deal and no sign of one.

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That lack of certainty is starting to drive decisions at Canadian manufacturing firms, according to a new survey from KPMG.

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Last week, the global consulting firm released a survey of business owners, executives and decision-makers at 275 Canadian manufacturing companies, ranging from firms with just over $10 million in annual sales to those generating more than $20 billion.

The results should be alarming.

KPMG found that 42% of firms have either already moved production to the United States or are considering doing so. Among firms with more than $300 million in annual sales, that figure rises to 49%, with 38% already having shifted some production south and another 11% considering it.

Those weren’t the only troubling findings.

KPMG also found that 36% are scaling back capital expenditures, while 12% have paused spending and another 9% have cancelled investments altogether.

Uncertainty is driving investment decisions

Canada’s most recent jobs report shows the country lost 17,000 manufacturing jobs in June. We have lost 52,000 manufacturing jobs since Carney became prime minister in March 2025 and 61,000 since January 2025, when Donald Trump’s tariff threats became a reality

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“I know the president, I’ve dealt with the president in the past in my previous roles when he was in his first term, and I know how to negotiate,” Carney said during the Liberal leadership race that made him prime minister.

That hasn’t exactly worked out.

At times, talks have collapsed because Trump is unpredictable. At other times, they have fallen apart because of needless mistakes by Carney and his team. Consider Carney’s determination to proceed with the Digital Services Tax until Trump suspended all talks in June 2025. Or consider the decision to impose new fees on American automobiles and threaten legal action against U.S. automakers in October 2025, just as negotiations were beginning in earnest following Carney’s White House visit.

Manufacturers are voting with their feet

Is it any surprise that Canadian manufacturers have gone from warning that Trump’s tariffs posed an existential threat to actively planning a move south? KPMG found that 52% of manufacturers are operating in what they describe as “endurance mode,” meaning they are struggling simply to survive.

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While Carney continues to deliver political messages about refusing to sign a bad deal, manufacturers are voting with their feet and their wallets.

Without guaranteed access to the American market, Canada becomes a less attractive place to invest.

We may not like that reality, but it remains reality.

Canada should not sign a bad deal simply for the sake of getting one. Yet Carney and his team do not appear to be pursuing a deal at all. Their strategy seems to be to wait out Trump, hoping Republicans lose the midterms and eventually the White House.

Given the loss of 61,000 manufacturing jobs, that is a risky plan.

Waiting for political change in Washington is not a strategy

It also ignores the reality that today’s Democratic Party is hardly a bastion of free trade. Leading figures such as Kamala Harris and Alexandria Ocasio-Cortez have expressed skepticism toward trade liberalization, while the Democratic Socialists of America, one of the party’s most energized factions, openly oppose free trade agreements.

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Manufacturing jobs are disappearing, business investment is declining, and as Carney debates whether Canada is in a technical recession or a real one, few can deny that the economy is stalled at best. His apparent strategy is to wait for the rising radicals in the Democratic Party to replace the radicals in the Republican Party, despite the fact that both parties are increasingly skeptical of free trade.

It’s not going to work, and more Canadian jobs will be lost.

But for Carney, as long as opposing Trump boosts his polling numbers, the political incentives remain clear — even as Canada’s economy suffers.

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