Tariffs are hurting U.S. manufacturing sector too, economist warns as Canada’s GDP stalls

Chief Economist for the Conference Board of Canada Pedro Antunes reacts to the GDP being unchanged in November 2025.

Tariffs are a lose-lose situation for Canada’s and the United States’ manufacturing sector, says a chief economist.

His comments come after Statistics Canada released its November GDP data on Friday pointing to a soft fourth quarter, with the manufacturing sector dragging on the economy after posting a 1.3 per cent decline.

A global shortage of microchips stalled production at a major Canadian auto plant, by 6.4 per cent, creating a “bottleneck” for vehicle and parts output, the agency said.

While Canada’s manufacturing sector is already under pressure from ongoing trade tensions, the fallout is not confined to Canada alone, Pedro Antunes, chief economist at Signal49 Research, told BNN Bloomberg.

“These tariffs are not going to allow for the U.S. to be any more competitive,” he said.

“In fact, they’re hurting our competitiveness North America wide when we think about our positioning on the global stage.”

Antunes said when the U.S. applies tariffs on Canadian steel, aluminum, or auto-related products, the impact extends beyond a single product or sector.

Those materials often cross the border multiple times and frequently return to Canada because of the intricate, intertwined supply chains the two countries have built over decades, he said.

“The problems extend just beyond those segments that are specifically hit by tariffs,” said Antunes.

Antunes added that uncertainty around the tariff dispute is already weighing on hiring, investment, and consumer confidence within Canada’s manufacturing sector.

“All of these things are just suggesting a very lethargic economy, no matter which industries you’re really focused on,” he said.

Trade deal an ‘absolute necessity’ for auto sector

Looking ahead, Antunes said the outlook for the manufacturing sector remains weak, with Statistics Canada signalling just a 0.1 per cent increase in GDP for December.

“What that tells us is, essentially, the economy is flat,” said Antunes.

He warned the auto sector will remain under pressure without a resolution to trade tensions with the U.S., noting that about 85 per cent of Canadian manufacturing is destined for the American market.

More than 1,000 workers were laid off at General Motors’ Oshawa plant. The union representing the workers stated that these layoffs resulted from the company shifting jobs to the U.S.

“If we don’t have free access, and if we have tariffs at 25 per cent on Canadian content, that is not going to alleviate the situation anytime soon,” Antunes said.

“In fact, it likely is going to continue to get worse.”

While Canada has secured smaller trade wins, including a recent agreement with China that benefits the agriculture sector, Antunes said those deals are not enough to offset restricted access to the U.S. market, which still accounts for roughly three-quarters of Canada’s total trade.

“The trade deal is an absolute necessity for the auto sector. We are hopeful that we’ll see some signs or some settlement of a trade deal, but we’re not seeing that pan out in terms of increases until next year,” said Antunes.