Canada's Manufacturing Sector Hits a Pothole

OTTAWA — Hold onto your hats! Statistics Canada revealed a staggering 2.8% plunge in manufacturing sales for April 2025, marking the most significant monthly drop since October 2023. This decline has left analysts and industry experts rattled.

A Three-Month Slide

Manufacturing sales have plummeted to $69.6 billion, the lowest since January 2022, following a worrying trend of three consecutive monthly decreases. The sharp declines in key sectors, notably petroleum and coal products (down 10.9%), motor vehicles (down 8.3%), and primary metals (down 4.4%), are driving this alarming downturn.

Tariffs Taking a Toll

April wasn’t just any month; it was the first full month to feel the bite of U.S. tariffs impacting crucial Canadian industries, especially steel, aluminum, and automotive. Tariffs sparked a wave of uncertainty, forcing several auto assembly plants in Ontario to partially shut down their operations. The consequences are clear: manufacturers and wholesalers reported tariffs affecting nearly half of them.

Provincial Pain: Ontario Struggles Most

Eight provinces experienced a downturn in manufacturing sales, but Ontario bore the brunt of the tariff-related impacts. The province's automotive sector has been hit particularly hard, resulting in stark job insecurities and operational disruptions.

Wholesale Sales Stumble Too

Compounding the manufacturing woes, wholesale sales dropped by 2.3% in April, with the motor vehicles, parts, and accessories sector leading the way down. Rising prices, shifts in consumer demand, and escalating expenses for materials have added fuel to the fire.

Record Trade Deficit Adds Pressure

In a shocking turn, Canada recorded its largest merchandise trade deficit in history for April, hitting $7.1 billion as exports took a nosedive due to tariff pressures. CIBC senior economist Andrew Grantham highlighted that both manufacturing and wholesale sales fell short of expectations, indicating that the economy might start the second quarter with stagnation or minor negative growth.

What Lies Ahead?

With looming uncertainties, the manufacturing industry braces for more challenges. StatCan’s official GDP estimates for April are set to be released on June 27, but preliminary signs indicate that the economic outlook may be much grimmer than anticipated.

Correction Notice

This report was updated to correct previous inaccuracies regarding the number of consecutive monthly declines.