Economist Warns: Tariffs Damage U.S. Manufacturing While Canada’s GDP Stalls
Recent economic analysis reveals troubling trends for both U.S. and Canadian manufacturing sectors. Pedro Antunes, Chief Economist at the Conference Board of Canada, underscored the negative impact of tariffs on North American competitiveness. His remarks followed the release of November 2025 GDP data, indicating stagnation in Canada’s economic performance.
Impact of Tariffs on U.S. Manufacturing and Canadian Economy
Statistics Canada reported that the manufacturing sector experienced a disappointing decline of 1.3% in November. This downturn is partly attributed to a significant global shortage of microchips, which has dramatically reduced production capabilities at major Canadian auto plants, effectively creating a bottleneck in vehicle and parts output.
- Manufacturing Sector Decline: -1.3% in November 2025
- Auto Plant Production Decline: -6.4% due to microchip shortage
Antunes expressed concern that tariffs imposed on Canadian steel, aluminum, and automotive products are detrimental. He argued that these tariffs hinder the competitive edge of both Canada and the U.S. on the global stage, as materials often cross borders multiple times within complex supply chains.
The Broader Economic Impact
Antunes highlighted that the uncertainty stemming from tariff disputes is significantly affecting various economic factors. Hiring, investment, and consumer confidence are all showing signs of weakness as the manufacturing sector struggles to thrive. He described the overall state of the economy as “lethargic,” with projections indicating only marginal growth.
- Forecast for December GDP: +0.1%
- General Motors’ Oshawa Plant Layoffs: 1,000 workers affected
The Necessity of Trade Agreements
Looking ahead, Antunes stressed the absolute need for a comprehensive trade deal, especially for the auto sector, where 85% of manufacturing goods are sold to the U.S. He noted that without improved access and potential tariff reductions on Canadian content, conditions are unlikely to improve. Current tariffs, including a 25% levy on Canadian auto-related products, exacerbate these challenges.
Although Canada achieved minor trade successes, such as an agreement with China benefiting the agricultural sector, these wins do not compensate for limited access to the U.S. market, which accounts for approximately 75% of Canada’s trade. Antunes remains cautiously optimistic about the prospect of a trade settlement but admits that without significant changes, manufacturing conditions may continue to worsen.
