Canada's manufacturing sector experiences sharpest decline in five years due to US tariffs

Canada's industrial sector decline accelerated in June due to new US tariffs, causing the sharpest production drop since the pandemic had begun. The Manufacturing PMI fell to 45.6 points, remaining below the critical 50-point threshold for the fifth consecutive month, indicating ongoing sector contraction.

The primary deterioration factor was demand decline, particularly from foreign buyers. The new export orders index plummeted to 40.2. With approximately 75% of Canadian exports destined for the US, new steel and aluminum tariffs exacerbated negative effects.

Companies also faced rising prices and supply chain delays that intensified in June. Average delivery times have remained extended for twelve straight months, while raw material inventories continue shrinking. As noted by S&P Global Economics Director Paul Smith, trade uncertainty is undermining business confidence in future prospects.