By Paulina Phan, Senior Editorial Contributor
For decades, the flow of factory investment between the United States and Canada ran quietly in both directions. Since early 2025, the direction has become noticeably one way. In a KPMG in Canada survey of 250 business leaders, conducted in January 2025 as tariff threats mounted, 48 percent said they planned to shift investments or production to the United States to serve the American market and reduce costs. A follow-up KPMG survey published in March 2025 found that 62 percent of businesses would consider shifting some production activities south as a way to mitigate tariffs if they were imposed.
Plant level decisions since then have increasingly matched those intentions, and the shift is raising difficult questions in Canada about the durability of an industrial base that sends the large majority of its exports to a single market.
The drivers companies cite
Executives responding to the KPMG surveys pointed to three pressures: higher operating costs under tariffs, persistent uncertainty about future trade rules, and the need to redesign supply chains built for an era of low barriers. The tariff timeline explains much of the urgency. Broad US tariffs of 25 percent on Canadian goods took effect in March 2025, with an exemption for goods compliant with the Canada-US-Mexico Agreement following within days. Tariffs of 25 percent on Canadian built vehicles took effect on April 3, 2025, and US tariffs on steel and aluminum were raised to 50 percent in June 2025.
The arithmetic is structural. Statistics Canada research published in 2026, drawing on 2024 value added trade data, found that about 41 percent of Canadian manufacturing employment, roughly 694,000 jobs, is supported by American final demand. In the auto sector the share rises to about 76 percent. A manufacturer whose customers are mostly American faces a straightforward calculation when each cross-border shipment carries a tariff or the threat of one.
The auto sector leads
The largest moves have come in autos, the most integrated part of the two economies. Stellantis paused the retooling of its Brampton, Ontario assembly plant in February 2025, and in October 2025 announced a US$13 billion, four year American investment program that shifted next generation Jeep Compass production from Brampton to a reopened plant in Belvidere, Illinois. The company said the plan would raise its US production by 50 percent and add more than 5,000 American jobs. In Brampton, where the plant has been idle since retooling began, roughly 3,000 workers have been left in limbo, and Ottawa has since told the company it considers it in default of funding agreements tied to the plant.
General Motors ended production of its BrightDrop electric delivery van at the CAMI assembly plant in Ingersoll, Ontario in October 2025, a decision affecting about 1,200 jobs. GM’s Canadian leadership said the move was driven by weak demand for the vehicle, not by tariffs. GM also cut a third shift at its Oshawa assembly plant in early 2026, eliminating roughly 500 positions. Unifor, the union representing Canadian auto workers, attributed the Oshawa reduction to tariffs and noted that GM had expanded pickup production at its plant in Fort Wayne, Indiana.
Honda’s case shows the nuance involved. After a Japanese media report in April 2025 said the company would move CR-V production from Ontario to the United States, Honda Canada said no changes were being considered. The following month, however, Honda confirmed it would supply American CR-V demand from its US plants while its Alliston, Ontario plant builds the model for other markets, stating that overall production volume and employment at Alliston would not change. Honda also postponed a planned C$15 billion electric vehicle investment in Ontario by about two years. Toyota and Honda together accounted for more than 75 percent of the roughly 1.2 million vehicles assembled in Canada in 2025, according to Reuters, which makes their production decisions especially consequential for Ontario.
Unifor has responded with a “Sell Here, Build Here” campaign, escalated in spring 2026, urging Ottawa to require companies selling vehicles in Canada to manufacture there and to penalize offshoring. The union has also pointed to smaller suppliers, including Swiss parts maker Autoneum, which announced the closure of its London, Ontario facility.
Beyond autos: solar cells and tooling
- Canadian Solar, headquartered in Guelph, Ontario, committed more than US$800 million in October 2023 to a 5 gigawatt solar cell plant in Jeffersonville, Indiana, expected to employ about 1,200 people and supply its module assembly plant in Mesquite, Texas. Combined with the Texas facility, its announced US manufacturing commitments exceed US$1 billion. Executives framed the investments around American clean energy incentives and the local content rules attached to them, and the Indiana plant has been ramping toward production through 2026.
- Titan Tool & Die, a Windsor, Ontario auto parts maker founded in 1956, locked out its 25 workers in August 2025. Unifor says the company has removed equipment and raw materials from the plant and intends to move the work to its facility in the United States. The company has not publicly confirmed its plans for the Windsor site, and the dispute remains unresolved.
What the Canadian data show
Statistics Canada’s Labour Force Survey shows manufacturing has been among the sectors most exposed to the trade dispute. The sector added about 15,000 jobs in May 2026, bringing manufacturing employment to roughly 1.83 million, but remained about 44,000 positions below its level in January 2025, before the first round of US tariffs. The May figures, released June 5, also showed the wider economy adding 88,000 jobs after shedding 112,000 in the first four months of 2026.
The survey evidence is similarly two sided. In Statistics Canada’s Canadian Survey on Business Conditions in early 2026, 50.6 percent of manufacturers reported being negatively affected by US tariffs, but 23.2 percent reported increased sales, suggesting some producers gained domestic customers as buyers substituted away from American goods.
The counterpoints
Canadian officials and industry voices make several arguments against reading the trend as a simple exodus. Production shifts are often partial, moving final assembly while leaving engineering, components and headquarters functions in place, and surveys of business intentions have consistently found headquarters staying in Canada. Many firms have also looked for new markets rather than new factory addresses: Ottawa has pursued trade diversification, including closer ties with the European Union, though analysts note that no overseas market can quickly replace continental supply chains built over sixty years.
Some industries are anchored by resources that cannot move. Quebec’s aluminum smelters run on low cost hydropower, and in late May 2026 Rio Tinto started up its US$1.5 billion AP60 smelter expansion in Quebec’s Saguenay region. Rio Tinto executives told Bloomberg that surging American electricity prices, driven by data centre demand, give the company little reason to build smelting capacity in the United States. “The reason we’re producing in Canada and Quebec today is because of the competitiveness of hydropower costs,” one executive said.
The debate in Canada, in other words, is not whether the pull southward is real. Survey data, plant announcements and employment figures all indicate that it is. The debate is over how much of the industrial base it ultimately takes, and what combination of trade negotiation, domestic policy and market diversification might slow it.
FAQ
How many Canadian manufacturers are moving production to the US? There is no single census of moves. KPMG in Canada’s January 2025 survey of 250 business leaders found 48 percent planned to shift investments or production to the United States, and a March 2025 follow-up found 62 percent would consider shifting some production there to mitigate tariffs. Company announcements since then, concentrated in autos, suggest a substantial minority have acted on those intentions.
Which companies have made the largest moves? In autos, Stellantis shifted Jeep Compass production from Ontario to Illinois within a US$13 billion US investment plan, while GM ended van production in Ingersoll and cut a shift in Oshawa. Outside autos, Canadian Solar’s US solar manufacturing commitments exceed US$1 billion across plants in Indiana and Texas.
Are all Canadian industries affected equally? No. Statistics Canada found about 41 percent of manufacturing jobs depend on US demand, and exposure is highest in autos, at about 76 percent. Resource based industries such as aluminum, powered by low cost Quebec hydropower, have structural reasons to stay.
Sources and methodology
Survey findings are from KPMG in Canada polls of 250 business leaders conducted January 21 to 27, 2025 and published in February 2025, and a follow-up KPMG survey published March 4, 2025. Employment data are from Statistics Canada’s Labour Force Survey for May 2026, released June 5, 2026. Business impact figures are from Statistics Canada’s Canadian Survey on Business Conditions in early 2026. The employment exposure estimates are from Statistics Canada research published in 2026 based on 2024 value added in exports data. Company developments are drawn from Stellantis’s October 14, 2025 investment announcement and Canadian Press and CBC reporting on Brampton, GM statements and Unifor releases on CAMI, Oshawa and Titan Tool & Die, Reuters reporting on Canadian vehicle production and Toyota and Honda exposure, Honda statements from April and May 2025, company announcements on Canadian Solar’s Indiana and Texas plants from 2023, and Bloomberg reporting on Rio Tinto’s AP60 smelter startup in May 2026.