Forty-two percent of Canadian manufacturing firms say they have already moved production to the US or are considering doing so, according to a KPMG report. The Big Four firm surveyed 275 Canadian manufacturing companies in May 2026.
Twenty-nine percent of manufacturers have moved some or all production to the US, while 13% plan to move some or all production south.
Of the companies that have moved some or all production to the US, the top reasons are: avoiding or reducing import tariffs, ongoing trade uncertainty, lower operating costs, a more favourable tax environment, and the ability to optimize supply chains.
Furthermore, 57% of manufacturers have paused, reduced, or cancelled capital investment projects (Capex) and 42% have paused or reduced research and development because of economic uncertainty and trade/tariffs.
Over half (52%) of respondents in the KPMG survey say they are operating in “endurance mode.”
“Last year, the conversation was about survival. This year, it’s about endurance,” said Anamika Gadia, partner and national leader of industrial markets at KPMG Canada. “Companies can delay investments, absorb higher costs and adjust their operations, but they can’t remain in a holding pattern indefinitely. At some point, uncertainty begins to shape long-term decisions about where investment, production and growth will occur.”
While 80% of manufacturers plan to keep headquarters in Canada, 11% plan to move headquarters to the US within five years.
Canadian manufacturers remain dependent on the US market, with 61% saying their businesses can’t survive without access to it. Eighty-six percent export goods outside the Canadian market and 96% say their goods are Cusma-compliant and not subject to tariffs.
“While tariffs are an obvious factor, Canadian manufacturers are making long-term decisions about where to locate based on a broader assessment of where they are most likely to have a competitive advantage,” said Joy Nott, partner, trade and customs at KPMG Canada.
The June 3, 2026 White House Executive Order on Strengthening Customs Enforcement is another element in President Donald Trump’s campaign to undermine Canada’s manufacturing sector. Under the EO, Canadian business would need to maintain a minimum level of tangible US assets to import goods under their own name. This would force many Canadian exporters to rely on US customers to act as importers of record – potentially straining commercial relationships.
Of the 13% of companies planning to move operations to the US, the factors that would encourage them to remain and grow their businesses in Canada include: ensuring certainty around free trade, continuing tariff relief, lowering corporate taxes, improving cost-of-living for employees, cheaper energy, and more skilled workers.
“While most manufacturers are staying, many are reassessing where future investment, growth and production will occur. The decisions made today will shape Canada’s manufacturing sector for years to come,” Gadia added.
https://www.consulting.ca/news/amp/5114/4-in-10-canadian-manufacturers-eyeing-move-to-united-states
