Appearance before the Standing Committee on International Trade (CIIT) by Minister of Industry and Minister responsible for Canada Economic Development for Quebec Regions

December 4, 2025

Table of contents

Canada's plan for industrial leadership

Question: Through its industrial leadership, what is the government doing to make Canada more globally competitive?

Key messages:

  • Budget 2025 introduces a new comprehensive Industrial Strategy to drive productivity, build a stronger economy and protect Canadian workers and industries, and diversifies Canada's exports
  • The government is focused on three priorities:
    1. Protecting industries and workers from global shocks
    2. Creating industries and jobs through investments in defence and major projects
    3. Attracting the talent and investment to power long-term growth
  • By using Canada's strengths – people, resources, stability, and innovation – the government is building a more resilient, secure, and productive economy that can compete in a more complex and dangerous world

Background:

Global competition, trade and geopolitical tensions, and rapid technological disruption are reshaping the foundations of economic prosperity. Long-standing assumptions that open markets and stable alliances would guarantee growth and security no longer hold. Rising protectionism, economic coercion, and industrial policy competition are forcing countries to act deliberately to secure strategic capabilities.

To that end, through Budget 2025, the Government of Canada is taking a proactive approach with the introduction of a new comprehensive Industrial Strategy to streamline regulations, fast-track project approvals, introduce pro-competitive and productivity reforms, and reduce taxes on investment to enable both the public and private sector to move quicky to build Canada strong. Recent and new Budget 2025 measures are collectively designed to address critical policy challenges through renewed industrialisation of Canada. This includes the new Major Projects Office, Build Canada Homes, Defence Industrial Strategy, Buy Canadian Policy, Climate Competitiveness Strategy and the Trade Diversification Strategy.

Canada's plan for industrial leadership is about building an economy that is resilient, secure, productive, and globally competitive through three key priorities:

  1. Protect industries and workers to safeguard Canadian jobs and promote Canada's economic resilience

    Canada will protect its industries and workers from global shocks, unfair trade practices, and tariff disruptions while laying the foundation for long-term diversification and resilience. This means providing trade-exposed sectors with the financing and tools needed to manage immediate pressures, adapt to new market realities, and strengthen competitiveness over time.

    The $5-billion Strategic Response Fund (SRF) supports sectors affected by tariffs and global trade risks – such as automotive, steel, aluminum, and forestry – while retaining flexibility to intervene in other high-value industries critical to maintaining and building domestic capacity. Complementary measures serve to expand Business Development Bank of Canada (BDC) loans for small and medium-sized enterprises to $5 million.

    The plan also enhances the Regional Tariff Response Initiative, providing $1 billion over three years in flexible support for affected SMEs. Globally, a new Trade Diversification Strategy and investment in trade corridors will expand access to international markets and strengthen domestic capacity.

  2. Create jobs and industries to stimulate job creation and supply-chains, and build sovereign capacity for Canada to compete and lead globally

    Canada's plan for industrial leadership advances major initiatives to build Canada's long-term industrial and technological capacity. The Defence Industrial Strategy (DIS) will leverage procurement to strengthen Canada's sovereign manufacturing base in aerospace, shipbuilding, and advanced manufacturing, while supporting innovation in dual-use and defence-related technologies such as artificial intelligence (AI), quantum, and space systems. A newly established Defence Investment Agency will accelerate investment decisions and align public procurement with industrial development objectives.

    Complementing these efforts, the Buy Canadian Policy positions federal purchasing power as a nation-building instrument – ensuring that public procurement, grants and contributions, as well as Crown investments strengthen domestic supply chains, drive innovation, and create predictable demand for Canadian firms across strategic sectors.

    Nation-building investments under the Building Canada Act and Major Projects Office are fast-tracking transformative infrastructure projects, including the Darlington Small Modular Reactor (SMR) and the high-speed rail corridor between Toronto and Québec City. These initiatives are expected to mobilize more than $60 billion in private investment and create thousands of jobs across construction, engineering, and advanced manufacturing supply chains.

    The plan also supports structural reforms to unlock domestic economic growth. Bill C-5: The One Canadian Economy Act removes federal exceptions under the Canadian Free Trade Agreement, reducing internal trade barriers and enabling a more integrated national economy. The Build Canada Homes initiative complements this effort by catalyzing a modern housing manufacturing industry through modular and prefabricated construction, doubling national homebuilding capacity while stimulating productivity gains in construction and materials manufacturing.

  3. Attract talent and investment to create a predictable, innovation-driven environment that supports long-term investment, competitiveness, and growth

    Canada aims to attract the talent, capital, and research excellence needed to drive the next wave of industrial growth. Strengthening venture and financing ecosystems will enable Canadian firms to scale, commercialize, and compete globally, while targeted investments in research, artificial intelligence (AI), and digital infrastructure will anchor world-class innovation and talent. By connecting researchers, entrepreneurs, and investors, the plan will translate Canadian discoveries into industrial strength and global market leadership.

    A renewed Artificial Intelligence Strategy, supported by $2 billion in federal investment is advancing technological leadership through initiatives such as the Sovereign AI Compute Strategy and National Quantum Strategy. These efforts will boost productivity and position Canada as a global exporter of advanced technologies. A memorandum of understanding with Cohere Inc. will accelerate the deployment of generative AI across the federal government, while an AI Strategy Task Force will provide expert guidance to maintain Canada's global leadership.

    Complementary actions under the Red Tape Review, which identified over 500 measures to streamline regulation and reduce administrative burden, will enhance investor confidence and improve efficiency.

Investment Canada Act: Updated national security guidelines

Question: Why is the Government of Canada updating its guidelines for the national security review of foreign investments?

Key messages:

  • The Government of Canada is updating the Guidelines on the National Security Review of Investments under the Investment Canada Act to reflect recent passing of Bill C-34, update the Sensitive Technology list, and recognize the importance of economic security as a factor for consideration when reviewing foreign investments
  • The government is committed to maintaining Canada's status as a world class investment destination by ensuring its foreign investment review regime adapts to emerging risks threatening Canada and its allies
  • Canada is facing more frequent and serious threats to its national security through economic means. Many other countries consider economic security or national interest in their investment review process

Supplementary messages:

If asked about the linkage between these updates and the imposition of U.S. tariffs:

  • These updates were planned before the imposition of tariffs by the U.S. on Canadian goods on March 4, 2025
  • These updates are country agnostic
  • However, recognition of economic security as a consideration in the government's investment review process will help to prevent predatory investment in Canadian companies in key sectors, especially at a time when Canadian companies could be at greater risk due to the cost of tariffs

Background:

The Investment Canada Act (ICA or "the Act") provides for the net benefit review of significant foreign acquisitions of control of non-cultural businesses by the Minister of Innovation, Science and Industry (ISI), as determined by a monetary threshold based on the value of the Canadian business. The Act also provides for the national security review of all foreign investments. This process is undertaken in consultation with the Minister of Public Safety and Canada's national security and intelligence agencies.

The Guidelines on the National Security Review of Investments, last updated in 2022, are public guidance available to potential investors and Canadian businesses to ensure that they understand the review process. These guidelines are being updated to reflect changes that were introduced with the passing of Bill C-34 – An Act to Amend the Investment Canada Act, to incorporate the recently released Sensitive Technology List, and to recognize the importance of economic security as a factor for consideration during national security reviews. These updates to the Guidelines are consistent with how our allies view national security, and also demonstrate Canada's resolve to protect our economic security in light of the changing trade environment.

ICA policies are regularly updated in response to an evolving global threat environment through policy statements or adjustments to guidelines or relevant legislation.

State of Canadian economy

Question: What is the current state of the Canadian economy?

Key messages:

  • Canada's economy remains resilient while facing challenges from global uncertainty and U.S. trade actions
  • The government is taking action to protect jobs and strengthen Canada's long-term economic resilience and sovereignty, particularly in industries reliant on U.S. exports.
  • New measures like the Strategic Response Fund are supporting Canadian industries and workers in the face of trade disruption

Supplementary messages:

  • U.S tariffs and global uncertainty have slowed exports and investment, weakened economic growth and led to employment losses concentrated in goods-producing sectors
  • The government is taking actions to help Canadian businesses and workers affected by the trade disruption, while charting a path towards long-term growth, based on productivity and competitiveness
  • Canada's recovery will rely on attracting talent, capital investment, strengthening industrial capacity and diversifying markets

Background:

Canada's economy is navigating challenges but remains resilient. Headline GDP grew by 2.6 percent in the third quarter of 2025, driven by an improvement in the trade balance relative to Q2. Despite this strength, global uncertainty and U.S. tariffs continue to weigh on the Canadian economy, leading to weak investment, consumer spending and job creation. Uncertainty is weighing on businesses, keeping firms cautious about the future and limited a rebound in activity. Industries deeply tied to U.S. supply chains, including energy, autos, and agriculture, remain the most exposed. This has left Canada particularly vulnerable, given that roughly 75 percent of exports are typically destined for the U.S.

While the economic outlook is challenging, the Bank of Canada projects that Canada will avoid a technical recession. Under the current tariff scenario, GDP will rebound modestly by about 1 percent in the second half of 2025, gradually reaching 2 percent by 2027 if trade uncertainty eases. Inflation is expected to remain close to the 2 percent target, though overall activity will remain on a permanently lower path compared to a scenario without tariffs.

The labour market is showing clear signs of stress, with significant job losses concentrated in goods-producing industries that are critical to Canada's industrial capacity. The details indicate that the decline in employment was primarily the result of job losses in sectors impacted by US tariffs and the related uncertainty, with significant losses in the manufacturing sector and transportation and warehousing. For example, manufacturing lost nearly 21,000 jobs between January and October 2025, and broader layoffs are eroding confidence in the labour market.

While most of the effect of U.S. tariffs has been contained by Canada–United States–Mexico Agreement (CUSMA) compliance, tariff impacts have largely concentrated on products that are not eligible for CUSMA exemptions, such as steel, aluminum, copper, vehicles, and lumber. As such, rural economies are under particular strain, as some of the sectors most targeted by U.S. Section 232 tariffs represent the backbone of rural employment. Any further escalation in trade disputes risks amplifying job losses in these regions, undermining household incomes and local economic stability.

Tariffs and economic uncertainty are compounding Canada's long-term structural challenges, including stagnant productivity and weak business investment. Trade barriers disrupt trade flows, raise input costs, and increase the complexity of supply chains, limiting firms' ability to invest in productivity-enhancing assets and technologies. Catalyzing private investment is essential to reverse this trend, enabling businesses to grow, scale, and adopt technologies, particularly in green and digital sectors, thereby strengthening Canada's competitiveness and resilience in the global economy.

The Government of Canada is responding to these challenges with a comprehensive Industrial Strategy through Budget 2025 that links immediate relief with long-term resilience, including, notably streamlined regulations, fast-tracked project approvals, the introduction of pro-competitive and productivity reforms, including tax initiatives to spur investment to enable both the public and private sector to move quicky to build Canada strong.

Specifically for tariff impacted sectors, the Strategic Response Fund (SRF), for example, is a $5 billion initiative designed to help firms in trade-exposed sectors not only withstand immediate tariff pressures but also diversify beyond the U.S. and support long-term growth, anchors this approach. The SRF is complemented by a wider set of Budget 2025 tariff-response measures, including the Regional Tariff Response Initiative, immediate liquidity supports for SMEs through BDC's Pivot to Grow program, loan guarantees and flexibilities under the Large Enterprise Tariff Loan Program, and the new Buy Canadian procurement measures. Together, these programs form a comprehensive package to help workers and businesses absorb tariff shocks, adapt operations, and strengthen competitiveness amid heightened trade uncertainty.

Canada's steel and aluminum sectors: Impacts of U.S. tariffs

Question: What is the Government of Canada doing to support Canada's steel and aluminum sectors considering U.S. tariffs?

Key messages:

  • The Government of Canada is committed to maintaining a strong Canadian steel and aluminum industry and the good-paying jobs that come with it
  • In the face of U.S. tariffs, the government has taken decisive action to safeguard workers and businesses, including counter-tariffs, worker support programs, and funding measures to help steel and aluminium companies better serve the Canadian domestic market
  • The government continues to consult industry on further measures to counter unfair trade practices and restore access to the U.S. market
  • U.S. tariffs are hurting millions of people on both sides of the border by driving up costs, raising prices, and lowering demand

Supplementary messages:

  • Any measure that shuts out Canadian steel and aluminum imports harms U.S. companies and the integrated supply chains that rely on long-term contracts and just-in-time delivery
  • Canada is deeply concerned about the ongoing inclusion of new derivative products applicable to steel and aluminum tariffs that will cause further harm to integrated supply chains that are imperative to our shared prosperity
  • Canada has responded to the tariffs by introducing a suite of countermeasures designed to help Canadian steel and aluminum companies remain competitive, while urging the U.S. to remove them as soon as possible

Background:

The imposition of U.S. tariffs have significant consequences for Canada's steel industry, introducing material financial injury and directly impacting firm operations. Concrete statistics on current and expected job losses are not yet available. However, initial estimates are in the high hundreds, with thousands at immediate risk.

Most major producers have reported a precipitous drop in shipments to the U.S. and other significant operational disruptions, forcing production adjustments and worker layoffs. Overall, the Canadian steel industry is doing extremely limited business with the U.S. with exports likely dropping by over a million tonnes of steel in the first two quarters. The administration's widening of the scope of products for which the tariffs apply to, continually adding new derivative products, compounds these impacts even further.

Primary aluminum producers have not experienced the same level of acute and immediate impact as steel producers, primarily given high commodity prices and continued U.S. reliance on Canadian primary aluminum – the U.S. can only meet about one-third of its primary aluminum demand at full capacity. However, a sustained U.S. tariff rate of 50 per cent on Canadian aluminum exports is having an impact on the industry's sustainability, as demand drops in response to high-prices and companies pull back on capital investment decisions.

For aluminum, the most significant near-term impacts of the tariffs, are being felt in the downstream aluminum sector which is much more reliant on two-way cross-border trade. Downstream aluminum producers continue to grapple with elevated input costs and constrained access to the U.S. market. While high prices benefit primary aluminum producers, it has significantly increased input costs for downstream firms, particularly SMEs, greatly eroding their profit margins.

The government has announced a series of measures to bolster its response, including:

  • 25% tariffs on a list of US steel product imports worth $12.6 billion and aluminum products worth $3 billion
  • Commitment of $5 billion, delivered through the new Strategic Response Fund (SRF), with flexible terms to help firms in all sectors, including steel and aluminum, impacted by tariffs to adapt, diversify and grow
  • Stricter tariff rate quotas (TRQs) to curb foreign steel imports. For non-Free Trade Agreement (FTA) countries, TRQs will be reduced to 20% of 2024 volumes, with a 50% tariff applied above that threshold. FTA partners (excluding the U.S. and Mexico) will be subject to TRQs at 75% of 2024 levels, with the same over-quota tariff
  • A 25% tariff will apply to imports containing steel melted and poured and aluminum smelted and cast in China. Canada is also reviewing its remission framework and trade arrangements to strengthen the competitiveness of domestic producers
  • Additionally, a new 25% tariff on targeted imported steel-derivative products such as wind towers, prefabricated buildings, fasteners, and wires
  • A new reskilling package for up to 50,000 workers, more flexibility and extended benefits in the Employment Insurances, and a new digital jobs and training platform to connect Canadians workers more quickly to careers
  • Earmarking more than $100 million over two years to provide support to eligible employers in sectors with an active Work-Sharing agreement and commit to supporting training for employees working reduced hours, helping up to 26,000 Canadian workers in various sectors, including steel
  • $150 million of the Regional Tariff Response Initiative (RTRI) carved out for steel producers
  • Enhanced financing tools, including changes to the Large Enterprise Tariff Loan (LETL), expanded support through the Bank of Canadian Entrepreneurs' (BDC) Pivot to Grow, and Regional Development Agencies (RDAs)
  • Prioritizing the use of Canadian steel and aluminum in publicly funded projects through the new Buy Canadian procurement policy, requiring all contracts worth over $25 million to prioritise Canadian materials
  • Working with railway companies to cut freight rates for transporting Canadian steel and lumber interprovincially by 50 percent, beginning in Spring 2026

Canada's aerospace sector: Impacts of U.S. tariffs

Question: What has been the impact of U.S. tariffs on Canada's aerospace sector?

Key messages:

  • The Government of Canada is committed to maintaining a strong Canadian aerospace industry and the good-paying jobs that come with it
  • The Canadian and U.S. aerospace industries are highly integrated, and spur innovation and economic growth on both sides of the border
  • Canada is investing in the aerospace industry to strengthen it and build a strong Canadian economy that is connected to reliable trade partners
  • U.S. tariffs are hurting million of people on both sides of the border by raising costs, raising prices, and lowering demand
  • Canada will continue to take all measures necessary to support Canadian workers, businesses, and consumers

Supplementary messages:

U.S. Section 232 National Security Investigations in Aerospace

  • The Government of Canada continues to argue that Canadian aerospace products do not constitute a national security risk for the U.S. In fact, the Canadian products currently under review contribute to a broader North American resilience and security, from which both Canada and the U.S. benefit.

Background:

The Canadian aerospace sector is of national strategic importance to Canada and a key industry for Canada's national security. In 2024, it contributed $34.2 billion to gross domestic product (GDP) and 225,000 jobs to Canada's economy. Investing $1.2 billion in research and development (R&D) in 2024, the sector is Canada's largest R&D spender among manufacturing industries. The sector actively participates in global supply chains and ranked in the global top five across civil flight simulators, engines, and aircraft segments.

National in scope, Canada's aerospace sector is home to a wide range of industry-leading manufacturers of aerospace products, including aircraft, helicopters, engines, simulators, landing gear, and aerostructures and components as well as space robotics and satellite systems for communications and Earth observation. The industry also supplies a wide array of maintenance, repair and overhaul (MRO) services for aircraft and aircraft components.

Canada and the U.S. share a deep and longstanding industrial relationship in aerospace characterized by highly integrated supply chains and significant cross-border investments in products, facilities, R&D, and labour.

The aerospace sector is highly export oriented with the U.S. comprising 63 percent of Canada's current global exports. Currently, Canadian exports of aerospace products that are CUSMA compliant enter the U.S. duty free. However, any changes to this approach resulting in Canadian exporters facing tariffs would be very detrimental to the sector.

On May 1, 2025, the U.S. Secretary of Commerce announced an investigation to determine the effects on the national security of imports of commercial aircraft and jet engines, and parts for commercial aircraft and jet engines. On July 1, 2025, the U.S. Secretary of Commerce announced a separate section 232 national security investigation of imports of unmanned aircraft systems (UAS) and their parts and components. These investigations have been initiated under section 232 of the Trade Expansion Act of 1962 and could eventually lead to the imposition of new tariffs. As part of these investigations, the U.S. Department of Commerce requested public comments and Canada has provided submissions to both investigations.

Canada's auto sector: Impacts of U.S. tariffs

Question: What is the Government of Canada doing to support the Canadian automotive industry considering U.S. tariffs?

Key messages:

  • The Government of Canada is committed to maintaining a strong Canadian automotive industry and the well-paying jobs that come with it
  • Automotive trade between Canada and the U.S. is balanced and shows how strong and interconnected our economies are
  • Canada recognizes the challenges that tariffs present to such an integrated industry and has adopted a proportionate response
  • Since April 2025, the government announced a series of strategic measures to support businesses and workers in those sectors most impacted by U.S. tariffs and trade disruptions, including the automotive industry
  • Canada continues to engage with the United States to address its automotive tariffs on Canada

Supplementary messages:

  • Canada responded to U.S. automotive tariffs with reciprocal tariffs of 25% on imports of passenger vehicles and certain trucks from the U.S. This measure mirrors the U.S. approach with respect to Canada-U.S.-Mexico Agreement (CUSMA) rules of origin
  • Because vehicles assembled in Canada contain a significant number of U.S. parts (approximately 50% U.S), the effective tariff rate on Canadian produced vehicles is approximately 12.5%
  • Canada has implemented a measure that allows automakers in Canada to import a certain number of U.S.-assembled, CUSMA-compliant vehicles free of the counter-tariffs, provided that they continue to produce vehicles in Canada and complete planned investments
  • Canada stands ready to work with the United States in a way that strengthens North American automotive production and preserves Canada's preferential tariff access

Background:

The Canadian automotive sector supports over 125,000 direct jobs, contributed $16.8 billion in 2024 to Canada's gross domestic product, and is one of the country's largest export industries. The sector is anchored by the presence of five automotive manufacturers:

  1. Stellantis
  2. Ford
  3. General Motors (GM)
  4. Toyota
  5. Honda

That are supported by a diverse supply chain of nearly 700 automotive parts manufacturers across Canada. In 2024, Canada produced over 1.3 million vehicles, ranking 14th globally in terms of vehicle production.

In 2024, automotive trade with the U.S. totalled $152 billion ($75 billion in exports and $77 billion in imports).

On April 3, 2025, the U.S. implemented Section 232 tariffs of:

  • 25% on all Canadian vehicles that do not meet the Canada-U.S.-Mexico Agreement (CUSMA) rules of origin
  • 25% tariffs on the value of non-U.S. content for vehicles that qualify under CUSMA

On May 3, 2025, the U.S. imposed tariffs of 25% on non-CUSMA-compliant auto parts under Section 232 of the Trade Expansion Act.

For Canada and Mexico, CUSMA-compliant auto parts are not subject to the 25% tariffs until the Department of Commerce (in consultation with U.S. Customs and Border Protection) establishes a process to apply the tariffs exclusively to the value of non-U.S. content in these parts.

On October 17, President Trump issued a Proclamation to apply a tariff on imports of medium- and heavy-duty vehicles (MHDVs), medium- and heavy-duty vehicle parts (MHDVPs) and buses into the U.S. As of November 1st, imports of MHDVs have been subject to a tariff of 25% on non-U.S. content and 25% on non-CUSMA-compliant MHDVPs. Imports of buses are subject to a tariff of 10%.

Effective April 9, 2025, Canada responded with reciprocal tariffs of 25% against imports of passenger vehicles from the U.S. Canada's surtax order mirrors the U.S. approach with respect to CUSMA rules of origin.

On April 15, 2025, Canada announced a performance-based remission framework for automakers, designed to incentivize continued production and investment in Canada. The remission framework allows automakers that continue to manufacture vehicles in Canada and/or maintain their investments to import a certain number of U.S.-assembled, CUSMA-compliant vehicles into Canada, free of the countermeasure tariffs that Canada has imposed.

On October 23, 2025, Canada announced significant reductions to the import quotas of General Motors (GM) and Stellantis following their decisions to scale back their manufacturing presence in Canada, directly breaching their commitments to the country and Canadian workers.

On September 5, 2025, the government announced a new series of strategic measures for Canadian industries most impacted by U.S. tariffs and trade disruptions, including automotive. These initiatives will help Canadian businesses retool their production and diversify their products. These new measures include the following:

  • A new Strategic Response Fund: The government will invest $5 billion through a new fund with flexible terms to help firms in all sectors impacted by tariffs adapt, diversify, and grow, with support provided to industries by new workforce alliances to align training and workforce needs
  • A new Buy Canadian policy: The government will introduce a new policy to ensure that the federal government buys from Canadian suppliers, requiring local content when domestic suppliers are unavailable, extending this approach to all federal funding streams and Crown corporations, and provides a roadmap for provinces and municipalities to apply similar standards to their own procurement
  • Immediate liquidity relief: The government will expand Business Development Bank of Canada loans for small and medium-sized enterprises (SME) to $5 million, provide more flexible financing through the Large Enterprise Tariff Loan Facility, give the automotive sector flexibility by waiving 2026 model year vehicles from Electric Vehicle Availability Standard requirements, and by launching an immediate 60-day review of these regulations
  • Regional Tariff Response Initiative: The government will expand support to SMEs to $1 billion over three years, with flexible terms, and increase new non-repayable contributions to eligible businesses impacted by tariffs across all affected sectors

Canada's manufacturing sector: Impacts of U.S. tariffs

Question: What is the Government of Canada doing to support the Canadian manufacturing sector considering U.S. tariffs?

Key messages:

  • The Government of Canada continues to take strong action to support Canadian workers and businesses
  • The Prime Minister has announced a series a targeted and strategic measures to support the sectors most exposed to U.S. actions, while accelerating efforts to strengthen supply chain resilience and reduce vulnerability to external shocks
  • Canada is proactively charting its own path, supporting domestic production, strengthening critical sectors, and mobilizing investment to drive innovation and competitiveness during this period of global transition
  • The Government of Canada remains ready to engage with the United States to pursue a stable and predictable agreement. The Government will not rush negotiations and will take the time needed to secure the right outcome for Canadian workers and businesses

Supplementary messages:

  • Canada is taking clear, steady action to protect workers and industries as U.S. tariff measures create broad global uncertainty and continue to disrupt integrated North American supply chains
  • The Government is strengthening domestic industrial capacity through strategic investments – supporting innovation, expanding productive capabilities, and building the resilient supply chains needed for long-term economic security
  • Canada is also pursuing a broader diversification strategy, deepening partnerships with reliable, like-minded economies in the EU and Indo-Pacific to expand market access, secure critical inputs, and reduce long-term vulnerability to future shocks
  • A strong and competitive manufacturing base is vital to Canada's future prosperity. Canada is taking steps to anchor high-value production at home, support advanced manufacturing, and position firms to complete globally in an increasingly risky economic environment

Background:

The current U.S. Administration imposed a series of tariffs against Canada. The U.S. Department of Commerce is also currently undertaking a number of national security reviews into a several additional goods, including semiconductors, pharmaceuticals, critical minerals, lumber, and medium- and heavy-duty vehicles.

The Government of Canada has responded with the following countermeasures:

  • 25% tariffs on a list of steel products worth $12.6 billion and aluminum products worth $3 billion, effective as of March 13, 2025
  • 25% tariffs on non-Canada-United States-Mexico Agreement (CUSMA) compliant US-made vehicles, and on the non-Canadian and non-Mexican content of CUSMA compliant US-made vehicles, effective as of April 9. Vehicle imports from the US totalled $35.6 billion in 2024

The Government of Canada has introduced a range of financial and advisory supports to help Canadian businesses navigate the economic impacts of U.S. tariffs. These initiatives aim to preserve cash flow, maintain operations, and support long-term competitiveness.

  • Trade Impact Program by Export Development Canada (EDC): $5 billion in financing over two years to help exporters reach new markets, manage tariff-related disruptions (e.g., losses from non-payment, cash flow issues), and adapt to currency volatility
  • Targeted loans by Business Development Bank of Canada (BDC): $500 million in favourably priced loans for companies directly targeted by U.S. tariffs or operating within their supply chains
  • Farm Credit Canada (FCC): Sectoral Financing: $1 billion in new financing to reduce financial barriers for the Canadian agriculture and food industry
  • Tax Deferrals: Temporary deferral of corporate income tax payments and GST/HST remittances from April 2 to June 30, 2025, providing up to $40 billion in liquidity to Canadian businesses
  • Large Enterprise Tariff Loan (LETL) Facility: Launched on April 15, 2025, the LETL facility is managed by the Canada Development Investment Corporation (CDEV) via the Canada Enterprise Emergency Funding Corporation (CEEFC) and provides financing to large Canadian companies
  • Strategic Response Fund (SRF): A new $5 billion fund with flexible terms to help firms in all sectors impacted by tariffs to adapt, diversify and grow
  • Buy Canadian: A new policy to ensure the federal government buys from Canadian suppliers or requires local content when domestic suppliers are unavailable. This policy will extend to all federal funding streams and Crown corporations and will provide a roadmap for provinces and municipalities to apply similar approaches to their own procurement
  • Regional Tariff Response Initiative: A $1 billion program to support small and medium-sized enterprises impacted by tariffs, across all sectors. It includes targeted support for the steel sector

This is in addition to sector-specific measures for steel, softwood lumber, and canola and agriculture producers, as well as a waiver of the Electric vehicle Availability Standard requirement for 2026 model year vehicles.

Businesses impacted by U.S. tariffs and engaged in export activities qualify for programs and measures that seek to minimize the effects of Canada's retaliatory tariffs on domestic businesses. This includes the duties relief program, the duty drawback program and counter-tariff remissions.

Lastly, the Government implemented several temporary measures to support Canadian workers whose employment may be impacted by the imposition of U.S. tariffs:

  • Waiving the EI waiting period: Workers no longer need to wait one week before receiving EI benefits, allowing for more immediate income support
  • Suspension of separation rules: For a six-month period, EI rules requiring workers to exhaust their severance or separation pay before collecting benefits have been suspended. This enables quicker access to support following job loss
  • Eased eligibility requirements: The government has increased the applicable regional unemployment rate thresholds used to determine EI eligibility, making it easier for affected workers to qualify for benefits
  • EI Work-Sharing Program: The EI Work-Sharing Program allows employees to work reduced hours while receiving EI benefits, helping businesses retain skilled staff during temporary downturns

On September 5, the government also announced a new reskilling package for up to 50,000 workers, in addition to added flexibility and benefits for Employment Insurance and a new digital jobs and training platform.

These measures apply to workers across sectors that have been impacted by U.S. tariffs or Canada's countermeasures, particularly in manufacturing, automotive, and steel and aluminum-related industries.


Impacts of U.S. trade disruptions on Canada's small businesses

Question: What is the Government of Canada doing to support Canadian small and medium-sized businesses impacted by U.S. trade disruptions?

Key messages:

  • Small and medium-sized businesses are key contributors to Canada's international trade, representing 40% of the total value of Canada's exported goods
  • Due to United States tariffs and other trade policy shifts, Canadian businesses are facing rising costs and sales disruptions
  • The Government of Canada is using every tool at its disposal to protect Canadian small and medium-sized businesses and help them stay competitive
  • Budget 2025 introduced a new Trade Diversification Strategy to increase Canada's global trade participation and provide Canadian businesses with a comprehensive suite of measures to expand internationally

Supplementary messages:

  • Canada is engaged in ongoing negotiations with the United States (U.S.) and aims to reach a good deal that benefits Canada
  • The Government of Canada will continue to protect Canadian interests and prioritize the needs of the national economy
  • Improving affordability for small businesses and all Canadians is key to Canada's economic success
  • Budget 2025 unveiled the Trade Diversification Strategy, which aims to double overseas exports within ten years and increase Canada's trade by $300 billion. This initiative will support business growth in major competitive sectors and promote engagement with the world's fastest-growing markets
  • To help entrepreneurs navigate economic uncertainty, the Business Development Bank of Canada (BDC) is delivering the $500 million Pivot to Grow initiative, providing Canadian businesses with working capital loans for up to $5 million

Background:

Canada and the U.S. have deeply integrated economies. Nearly 78% of goods exported by Canadian small and medium-sized enterprises (SMEs) go to the U.S.. However, recent U.S. trade policy changes have negatively affected Canadian SMEs.

U.S. trade policy changes:

Tariffs

  • March 4, 2025: U.S. imposed a 25% tariff on Canadian imports, 10% on energy/potash (under IEEPA border/fentanyl).increasing to 35% on August 1, 2025
  • March 7, 2025: Goods qualifying under the Canada-United States-Mexico Agreement (CUSMA) exempted (under IEEPA border/fentanyl)
  • March 12, 2025: Global 25% tariff on steel/aluminum implemented; rose to 50% by June 4, 2025, and broadened additional derivatives (under Section 232)
  • April 3, 2025: Canadian automobiles/light trucks face a 25% global tariff
  • May 3, 2025: 25% tariff on non-CUSMA auto parts (under S.232)
  • August 1, 2025: Semi-finished copper products/derivatives face 50% global tariffs. (under S.232)
  • August 7, 2025: Tariff to 35% on non-CUSMA goods
  • August 29, 2025: U.S. suspended De Minimis exemption eliminating duty-free treatment for shipments under $800. This disrupts Canadian SMEs relying on low-value cross-border delivery

Federal Government response:

The government has introduced a range of tariff relief supports available to SMEs, including:

  • Strategic Response Fund (ISED): $5 billion to support businesses impacted by trade disruption to diversify markets, strengthen domestic production, develop new value-added products, improve productivity and reinforce supply chains
  • Canada's regional development agencies (RDAs) new Regional Tariff Response Initiative: $1 billion over 3 years to support SMEs impacted by tariffs
  • Business Development Bank of Canada (BDC) Pivot to Grow initiative: $500 million to provide loans to SMEs affected by tariffs
  • BDC Softwood Lumber Guarantee Program: $1.2 billion to guarantee loans and lines of credit to the softwood lumber businesses impacted by tariffs
  • Export Development Canada (EDC) Trade Impact Program: $5 billion to help businesses diversify away from U.S. markets
  • Farm Credit Canada (FCC) Trade Disruption Customer Support: $1 billion to provide financing for farmers impacted by tariffs
  • Global Affairs Canada (GAC): Information, tools, and support to help Canadian businesses navigate U.S. tariffs and export duty-free under CUSMA

Budget 2025 introduced several measures under the Trade Diversification Strategy to increase and diversify Canada's participation in global markets. Targeted SME supports include:

  • SME Export Readiness Program (ISED): $46.5 million over four years for training SMEs with limited export experience
  • CanExport (GAC): $68.5 million over four years to help SMEs and industry associations share costs for international business activities
  • Innovation Partnership Program & Canadian Technology Accelerator (GAC): $7.6 million over four years and $2.1 million ongoing to help Canadian firms scale exports via partnerships and technology initiatives


Impact of U.S. tariffs on groceries/affordability

Question: What has been the impact of U.S. tariffs on groceries and affordability?

Key messages:

  • The Government of Canada knows that the economy is only truly strong when it serves everyone. Many Canadians are struggling to get ahead
  • U.S. tariffs are impacting consumers, workers and businesses in both Canada and the U.S
  • The government is providing tariff relief for goods imported from the U.S. that are used in Canadian manufacturing, processing, and food and beverage packaging until January 31, 2026, to allow time for Canadian manufacturers to adjust their supply chains
  • This relief will give Canadian businesses more time to adjust and prioritize Canadian sources of supply

Supplementary messages:

  • Deeply integrated Canada-U.S. food supply chains benefit farmers, processors and consumers by providing essential goods at competitive prices, and ensuring high standards of food safety and quality
  • The current nature of the Canada-U.S. integration means that Canadian businesses need to go south of the border to develop new food ingredients from our crops – lentils, canola, peas, wheat and oats
  • The Government of Canada is supporting industry to grow and process more ingredients in Canada

Background:

Food prices:
Year-over-year grocery price inflation has generally trended upward since its most recent low in April 2024 (+1.4%). Grocery items contributing to the general acceleration included fresh or frozen beef and coffee, both due, in part, to lower supply. Price increases for food purchased from stores peaked at 4% in September. Though grocery prices decelerated in October (3.4%), prices remained elevated and have exceeded overall inflation for nine consecutive months.

Tariff relief:

In April 2025, the Government of Canada announced a temporary 6-month relief for goods imported from the U.S. that are used in Canadian manufacturing, processing and food and beverage packaging. This remission is provided on a time-limited basis to provide businesses and entities with additional time to adjust their supply chains and prioritize domestic sources of supply if available, and applies to goods imported into Canada before October 16, 2025. On October 17, the Government of Canada announced that this exemption would be extended for an additional two months, and now includes goods used in agricultural production. On November 26, 2025 the Prime Minister announced that the temporary remission of Canadian tariffs for manufacturing, food and beverage packaging, and agricultural production will end on January 31, 2026.

Sector overview:

In 2024, Canada's food and beverage processing sector generated $35.6 billion in GDP and over 310,000 jobs, representing 16.5% and 19.6% of manufacturing GDP and employment, respectively. In 2023, there were 8,696 food and beverage processing establishments with employees in Canada, with 92% classified as small (1 – 99 employees).

The distribution of facilities across Canada often reflects the availability of agricultural inputs, proximity to large consumer markets and regional economic conditions. The sector is also strategically important to other economic sectors (e.g., agriculture, forest product, tourism) given its use of inputs (e.g., vegetables, grains, paper packaging, plastic packaging) and role as a supplier (e.g., foodservice).

In 2024, Canada exported $58.4 billion of domestic processed food and beverage products, with 80% ($46.7 billion) going to the U.S., followed by China (5%) and Japan (4%). Reliance on the U.S. has only increased over the last decade with the market accounting for 80% of exports in 2024, up from 74% in 2015. Subsequently, the sub-sectors that are most reliant on the U.S. in terms of export intensity are bakeries and tortilla, grain and oilseed, sugar and confectionary, and preserved fruits and vegetables.

Canada-U.S. trade has resulted in a highly integrated food and beverage supply chain, including the exchange of cans, glass bottles, cartons, corrugate and other packaging materials between the two countries. This reliance also reflects the integrated nature of North American supply chains given that non-food inputs (e.g., steel cans) utilize inputs that are produced in Canada and exported to the U.S. for further transformation. According to industry, about 80% to 85% of food-grade steel cans are imported, largely from the U.S. Given U.S. tariffs on foreign steel, the price for these cans has increased, creating pressure for Canadian companies that manufacture canned vegetable and fruit.

Certain industries are also contending with tariffs from China. On August 14, 2025, China imposed a preliminary anti-dumping duty at a provisional rate of 75.8% on $4 billion worth of Canadian canola seed. China also announced it has launched an anti-dumping investigation into pea starch imported from Canada. This comes in addition to China's 100% tariff on $1.3 billion worth of Canadian canola oil, canola meal and pea imports, and a 25% tariff on $1.7 billion worth of Canadian seafood, fish and pork, which took effect March 20, 2025.

Tourism industry sector: Impacts of U.S. tariffs

Question: How is the Government of Canada supporting Canadian tourism businesses amidst the Canada-U.S. trade turbulence?

Key messages:

  • Trade disruptions are reshaping travel flows, and Canada's 2025 summer tourism season further demonstrated the tourism sector's resilience
  • For instance, May to August 2025 marked a strong season driven by unprecedented domestic demand and increased interest from international markets, whereby national tourism revenues reached $58 billion
  • The Canada Strong Pass, which has been renewed for the Winter holiday season and Summer 2026, and initiatives such as the International Convention Attraction Program and Indigenous Tourism Fund are helping businesses build on this momentum

Supplementary messages:

  • The Government of Canada remains firmly committed to safeguarding and expanding tourism growth by ensuring Canada continues to be recognized as a welcoming, accessible, and world-class destination for all visitors—including those from the United States (U.S.) In addition, strengthening domestic tourism capacity and participation remains a national economic priority, ensuring sustained stability and diversification in market demand across regions and seasons
  • Since the start of the 2025 tariff dispute, Canadian travel to the U.S. has fallen sharply. Year-to-date, total outbound travel from Canada to the U.S. is down 29.1%. Canadians are shifting travel plans to domestic destinations which is creating new revenue streams. Combined with industry advocacy and supportive government initiatives, many tourism businesses are pivoting to capitalize on this shift
  • Canada has also taken steps to expand affordability and access for travelers through the Canada Strong Pass, introduced in Summer 2025. The Pass enables both Canadians and international visitors to discover Canada's defining tourism assets, offering free or discounted access to Canadian national parks, museums, and VIA Rail
  • Budget 2025 reaffirmed this commitment by announcing the renewal of the Canada Strong Pass. Federal funding includes $116.3 million over two years. The launch window will run from December 12, 2025 to January 15, 2026, providing expanded access during Canada's peak winter travel period, followed by the 2026 summer travel season
  • Budget 2025 showcases our commitment to delivering a world-class FIFA World Cup 2026 through significant investments that ensure an exceptional experience for fans and visitors, while strengthening Canada's global sport profile and driving tourism and economic benefits for host communities
  • Budget 2025 proposes targeted investments to strengthen community identity and cultural access, supporting local festivals, arts presentations, and national celebrations that bring Canadians together, celebrate Canada's cultural diversity, and enhance tourism opportunities in communities across the country
  • Budget 2025 introduces new initiatives that will help enhance the visitor experience, including generational investments in transportation networks and airport infrastructure, strengthening the connections and assets Canada's tourism sector needs to grow, adapt, and compete globally

Background:

  • According to Destination Canada, preliminary domestic spending estimates show year-to-date spending in Canada of $71.6 billion. With an additional year-over-year growth of 5.9% as of October 2025, Canada has added $4.2 billion in spending over the same period in 2024
  • American travel to Canada by air in October 2025 increased by 1.3 percent year-over-year, while land travel declined by 0.7%. Overall, U.S. arrivals to Canada are down 4.3% year-to-date, driven by the drop in land arrivals
  • On January 31, 2025, the U.S administration announced new tariffs on Canada, including a 25% tariff on most Canadian goods and a 10% tariff on energy products. Canada responded with 25% retaliatory tariffs targeting $155 billion worth of U.S. goods, such as lumber, plastics, agricultural products, alcohol, and appliances. The U.S. later imposed a 25% tariff on Canadian autos and auto parts, to which Canada responded in kind
  • As of August 1, 2025, the U.S. increased tariffs on non-Canada-United States-Mexico Agreement (CUSMA)-compliant Canadian goods from 25% to 35%, with a 40% penalty tariff for goods transshipped to evade duties. Additional measures include 50% tariffs on steel and aluminum, 25% on non-U.S.-made autos and parts, and 10% on energy products. The U.S. also eliminated the "de minimis" exemption, meaning all goods entering the U.S. from Canada are now subject to duties, regardless of value
  • While over 85% of Canada-U.S. trade remains tariff-free under CUSMA, these measures are disrupting supply chains in tourism-reliant sectors. Costs for U.S.-sourced food, beverages, furnishings, promotional materials, and construction supplies have risen sharply, forcing operators to either absorb costs, pass them on to consumers, or seek alternative suppliers
  • The tariffs have also significantly altered travel flows. In October 2025, air travel by Canadians to the U.S. was down 23.9% and land travel by 32.1% compared to October 2024, continuing a downward trend since November 2024. These shifts create both immediate challenges—reduced cross-border visitor spending—and opportunities to capture more domestic and international market share for Canadian destinations
  • Despite trade turbulence, Summer 2025 for Canada's visitor economy was strong, driven by domestic demand and increasing interest from international markets. The Government of Canada is helping businesses build on this record momentum through investments, including:
    • International Convention Attraction Program (ICAP): $60 million to help Canadian cities secure major international events. This is expected to generate over $341.5 million in economic activity—delivering $23 for every dollar of federal support
    • Tourism Growth Program: $108 million to support tourism development projects, with 15% earmarked for Indigenous-led initiatives
    • Indigenous Tourism Fund: The fund invested $20 million to foster sustainable growth in the Indigenous tourism industry, and supporting nearly 330 Indigenous tourism businesses
    • Canada Strong Pass: Initiative offering free or discounted access to national parks, heritage sites, museums, and VIA Rail to stimulate travel

Pharmaceutical sector: Impacts of U.S. tariffs

Key messages:

  • The United States has been targeting the pharmaceutical sector through decisive trade actions and health and science policy changes
  • These measures are part of a plan to advance U.S. national security objectives with ramifications to the global pharmaceutical landscape in ways not seen before
  • Canada faces significant challenges to our industrial base, ability to capture global investments, and ensure access to medicines
  • The government stands ready to protect our national interests, including pursuing CUSMA negotiations to build regional resilience and maximize benefits to Canada

Supplementary messages:

  • Canada is facing unprecedented pressures from the U.S. but we stand ready to protect our industrial base and the health sovereignty of Canadians
  • This includes working closely with the United States to strengthen our continental defense, address common health security objectives and build a robust supply chain for essential medicines
  • It also includes looking beyond our borders to new markets seeking to deepen commercial ties with Canada

Background:

  • On April 1, 2025, the U.S. launched a section 232 national security investigation on pharmaceuticals, widely viewed as a precursor to tariffs. It considers the pharmaceutical sector as critical to its national security, citing overdependence on foreign supplies (China and India, in particular) as a key concern
  • Similarly, since April 15, 2025, five Executive Orders have been announced with a range of policy implications: lowering drug prices; streamlining regulation; onshoring biomanufacturing capacity; ending federal funded research conducted in countries of concern; and reducing anti-competitive practices by other countries – including global drug pricing schemes the U.S. deems discriminatory by using the Most Favoured Nation model
  • [REDACTED]
  • These policies would have broad implications on Canada. The U.S. is Canada's largest pharmaceutical trading partner, accounting for 77 percent of exports and 31 percent of imports. Canada and the U.S. have a highly integrated pharmaceutical supply chain, allowing both nations to address national security priorities and advance common health objectives. It is difficult to pivot away from this complex and highly regulated supply chain in the short term
  • [REDACTED]

Canada-U.S. bilateral relations

Key messages:

  • Canada is a source of strength for U.S. national and economic security. We are safer, stronger, and more prosperous when we work together
  • Our bilateral relationship facilitates over US$2.5 billion in daily cross-border trade, generating shared prosperity and security
  • Canadian companies employ almost 900,000 U.S. workers and nearly 8 million U.S. jobs are tied to trade with Canada
  • Our shared prosperity is deeply connected to our shared security. We are neighbours who are committed to each other's success because we know that our success is mutually reinforcing

Context:

U.S. political dynamics:

  • With Republicans holding slim majorities in the Senate and the House of Representatives, and a conservative-leaning Supreme Court, President Trump enjoys significant latitude in influencing legislative decisions in Congress, expediting the implementation of his policy agenda
  • President Trump's "America First" agenda is challenging domestic and global norms and long-established trade relationships
  • The administration has linked domestic priorities with its foreign and international trade policy, most notably seen related to tariffs and border management and fentanyl measures
  • The Trump Administration's shift towards an "America First" foreign policy is a departure from the prominent role the U.S. has traditionally played on the global stage. The administration has significantly decreased U.S. involvement in the international sphere, disengaging from or pulling out of international organizations and agreements like the Paris Accord or the UN Human Rights Council

Trade: 

  • Canada and the U.S. have benefited from the world's most integrated trading relationship, shaped over nearly four decades by free trade agreements, most recently the CUSMA, that support integrated North American trade and investment and drive regional trade growth
  • Despite trade tensions, U.S.-Canada commerce remains robust, with daily trade reaching $2.5 billion in 2024. In 2024, the U.S. remained Canada's top merchandise trading partner. Canada's total merchandise exports to the U.S. in 2024 stood at $596 billion, while Canada's total merchandise imports from the U.S. stood at $376.0 billion
  • In 2024, the U.S. ranked as the largest investor country of FDI stock in Canada, representing 51% of the FDI stock on ultimate investing country (UIC) basis, while the U.S. ranked as the largest recipient country of CDIA stock in 2024, receiving 52% of CDIA stock on immediate investing country (IIC) basis. Canada is also the U.S.'s top foreign energy supplier
  • The U.S. had a $64.2 billion merchandise trade deficit with Canada in 2024, entirely due to energy products. Excluding energy, the U.S. held a $34.3 billion trade surplus with Canada

Tariffs:

  • The Trump Administration's shift towards more aggressive, protectionist trade policies has challenged the Canada-U.S. relationship
  • Canada is subject to U.S. tariffs under the International Emergency Economic Powers Act (IEEPA) related to fentanyl and the border and Section 232 tariffs on steel, aluminium, autos, copper, softwood lumber and certain wood products, medium- and heavy-duty trucks their parts, and buses
  • Effective August 1, President Trump increased the IEEPA fentanyl tariffs to 35% for imports from Canada that were previously subject to a rate of 25% since March 4. The lower tariff rate of 10% for energy products and potash remains in place, as does the CUSMA compliant exemption for U.S. imports from Canada subject to IEEPA fentanyl tariffs
  • The U.S. continues to provide a CUSMA-compliance exemption from its IEEPA tariffs imposed on most Canadian goods since March 7, 2025
  • As a result of this exemption, with the exception of goods facing U.S. Section 232 steel and aluminum tariffs, Section 232 copper tariffs, vehicles subject to Section 232 automotive tariffs, and Section 232 lumber and wood product tariffs, the vast majority of Canadian exports to the U.S. enter duty-free
  • In this context, on September 1, Canada removed its counter-tariffs on most U.S. imports
  • Canada has maintained its countermeasures on steel, aluminium, and autos

Border:

  • Canada and the U.S. share a land border that is close to 9,000 km and is the longest international border in the world. There are 13 U.S. states, seven Canadian provinces and one territory along the border. Most Canadians – 2 out of 3 – live within 100 km of the border
  • Our two countries work hand-in-hand to ensure our shared border is safe and protected. Officials in both Canada and the U.S. cooperate closely to manage the secure and efficient flow of goods and people across the border, which is vital to both countries' economic competitiveness and prosperity
  • There are concerns regarding flows of people, illegal firearms and drugs in both directions. However, there continues to be coordination and cooperation between Canada and the United Stateds
  • Canada's $1.3 billion action plan enhances security and continues to strengthen our immigration systems, which includes the deployment of helicopters and increased drone-patrols as well as the creation of a new North American joint strike force to target transnational organized crime
  • Canada-U.S. cross-border collaboration focuses on reducing violent extremism, child sex exploitation, cross-border smuggling, and firearms violence, as well as deepening cybersecurity cooperation to improve the resiliency and protection of our critical infrastructure
  • There are many Canadian Indigenous people and U.S. Native American Tribes whose communities and cultures span the border

Defence and security:

  • Canada's national security and defence is underpinned by the Canada-U.S. defence and security partnership, which spans the full spectrum of cooperation – including shared defence of the continent, notably through the North American Aerospace Defence Command (NORAD). Canada and the U.S. also advance shared defence and security interests through NATO, the Five Eyes intelligence sharing partnership, defence materiel cooperation, and strong relationships between law enforcement agencies
  • Canada and the U.S. have committed to accelerate NORAD modernization and investment in related infrastructure
  • Canada and the U.S. cooperate closely on global security issues, including in Europe through NATO, by enhancing the capabilities of the Ukrainian security forces, and through the United States Security Coordinator for Israel. Additionally, Canada and the U.S. cooperate through the Combined Maritime Forces to promote peace and stability on the high seas, maintain a maritime presence and uphold sanctions in the Indo-Pacific region, collaborate on AUKUS Pillar II, as well as conduct illicit trafficking operations in the Caribbean Sea and eastern Pacific Ocean

Arctic:

  • Canada's foreign policy approach to the Arctic recognizes the U.S., alongside the Nordic countries, as our most important partner in the Arctic
  • Canada is collaborating with the U.S. and Finland on the ICE Pact (Icebreaker Collaboration Effort), a partnership to produce and maintain best-in-class polar icebreakers and other capabilities, including through the exchange of information and workforce development

Building on Canada's Defence Policy, Our North Strong and Free (2024), Canada's accelerated investments in the Canadian Armed Forces promise to establish a network of northern operational support hubs across the Arctic, acquiring a fleet of airborne early warning aircraft, deploying sensors on our coasts and underwater, and acquiring a new tactical helicopter fleet. Canada is also moving ahead with plans to expand the Canadian Ranger program, and will procure up to 12 under-ice capable conventionally-powered submarines to patrol all three coasts

Energy:

  • The Canada-U.S. energy relationship is fundamental to North America's energy security and supply, and the day-to-day health of our economies
  • We are each other's #1 source of imported energy across every source, with two-way energy trade in 2024 reaching $216.8 billion (US$153.7 billion)
  • Our shared network of over 100 cross-border oil and natural gas pipelines, and clean electricity transmission lines, move massive amounts of affordable energy back and forth. This security of supply makes Canadian and U.S. economies stronger and more resilient, supporting energy dominance, investment, industry, jobs and consumers

Environment:

  • About 43% of the 9,000 km border between Canada and the U.S. is water, with 300 lakes and rivers along the boundary. The joint stewardship of the environment is a cornerstone of Canada-U.S. relations, from air and water quality to wildlife management
  • Canada and the U.S. have made significant advancements to reduce methane emissions and establish a critical minerals supply chain
  • The Trump administration has been focusing on a deregulation agenda to achieve an "America First" energy dominance strategy. The potential impact on Canada-U.S. environmental and energy relations is at this point unknown

Canada-U.S. commercial relations

Canada – U.S. trade facts:

  • Canada and the U.S. share one of the world's most integrated economic, energy, and security relationships in the world
  • Every day, approximately $3.6 billion (US$2.6 billion) in goods and services cross the Canada-U.S. border, equivalent to $1.3 trillion per year (nearly US$1 trillion)
  • Canada is the largest market for U.S. goods in the world. Canada buys more goods from the U.S. than China, Japan, France, and the UK combined
  • Canada is the top merchandise export market for 32 U.S. states and ranks among the top three for 45 states
  • Canadian-owned businesses in the U.S. employ about 900,000 American workers, with nearly 8 million U.S. jobs tied to trade with Canada
  • Canada is the #1 supplier of energy to the U.S.; Canadian energy fuels the U.S. economy – our bilateral two-way energy trade totaled $203.2 billion (US$148.3 billion) in 2024
  • Canada supports U.S. manufacturing: over 70% of Canadian goods exported to the U.S. are used in the production of other goods
  • Canada has invested more in the U.S. than the other way around – in 2024, U.S. FDI in Canada was $762.7 billion (US$556.8 billion), while Canadian FDI in the U.S. was $1.3 trillion (US$949 billion)

Context:

Canada and the United States have shared one of the world's most integrated and beneficial bilateral economic relationships. This relationship has been shaped over decades through free trade agreements, most recently through the Canada-United States-Mexico Agreement (CUSMA), referred to as USMCA in the United States and T-MEC in Mexico, in force since July 2020. Canada remains strongly committed to preserving and strengthening this trilateral framework with Mexico and the U.S. as the foundation for North American economic competitiveness and prosperity. While CUSMA has supported North American trade and investment integration and facilitated regional economic growth, the current U.S. administration's shift toward more assertive and protectionist trade policies – exemplified by various tariff measures – has strained bilateral relations and introduced significant risks to Canada's economy.

On October 23, 2025, President Trump paused high-level trade discussions with Canada, citing a controversial Ontario-sponsored ad referencing a Ronald Reagan speech, and threatened an increase in tariffs. This is the second disruption in trade talks this year – discussions were also paused in June over Canada's proposed Digital Services Tax, resuming only after Canada suspended its implementation.

The U.S. is Canada's top trading partner, main export destination, and largest source of foreign direct investment (FDI). Key Canadian export sectors include automotive, defence, agriculture and agri-food, information and communication technologies, and life sciences. In 2024, the U.S. was the largest investor in Canada, representing 51% of the FDI stock, while the U.S. ranked as the largest recipient country of Canadian outward investment in 2024, receiving 52% of total Canadian investment abroad. Canada is also the United States' top foreign energy supplier.

Over 70% of Canadian companies choose the U.S. as their first export destination. The success these companies achieve in the U.S. market often serves as a springboard for exploring export opportunities in third markets. Over 70% of Canadian exports go to the U.S., with over 70% of those exports being used in U.S. manufacturing. Nearly 8 million U.S. jobs depend on trade with Canada, while 2.6 million Canadian jobs depend on exports with the United States.

In the context of growing uncertainty in the bilateral relationship, Canada is seeking to strengthen collaboration with reliable trading partners and allies around the world, while we also establish a new economic and security relationship with the United States. Despite the growing challenges in the bilateral trade relationship, Canadian firms are nevertheless expected to continue prioritizing the U.S. market due to geographic proximity, market size, preferential access (for CUSMA compliant goods), and strong personal ties.

U.S. tariffs on Canada:

  • IEEPA tariffs: On August 1, 2025, the U.S. increased the IEEPA fentanyl tariffs on imports of Canadian goods from 25% to 35%. The reduced tariff rate of 10% for energy products and potash, as well as the exemption for CUSMA compliant goods, remains in place
  • Section 232 tariffs on steel and aluminum: On March 12, 2025, the U.S. reimposed a global 25% tariff under Section 232 on steel and aluminum imports, including on derivative products. There is no CUSMA compliant exemption for Section 232 tariffs on steel and aluminum. On June 4, 2025, the U.S. increased its tariffs on steel and aluminum imports from 25% to 50%. On several occasions, the U.S. has widened the scope of Section 232 tariffs on steel and aluminum to include additional steel and aluminum derivative products. The 50% tariff applies only to the value of steel and aluminum content in derivative products
  • Section 232 tariffs on light vehicles and auto parts: On April 3, 2025, the U.S. imposed a global tariff of 25% on imports of automobiles and light trucks, including from Canada, under Section 232, and on May 3, 2025, for auto parts. The value of U.S. content in CUSMA compliant vehicles is exempt from Section 232 tariffs (subject to the approval of the Secretary of Commerce on a model-by-model basis). CUSMA compliant auto parts are not subject to 25% tariffs until the Department of Commerce establishes a process to apply the tariffs exclusively to the non-U.S. content of auto parts
  • Section 232 tariffs on copper: On August 1, 2025, the U.S. imposed a global 50% tariff under Section 232 on semi-finished copper products and copper-intensive derivative products. There is no CUSMA compliant exemption for U.S. 232 tariffs on copper
  • Section 232 tariffs on softwood lumber and certain wood products: The U.S. imposed a global tariff under Section 232 of 10% on softwood timber and lumber and a 25% tariff on certain upholstered furniture and kitchen cabinets and vanities, effective October 14, 2025. There is no CUSMA compliant exemption for Section 232 tariffs on softwood lumber and certain wood products. On January 1, 2026, the tariff on certain upholstered furniture will increase to 30% and the tariff on kitchen cabinets and vanities will increase to 50%
  • Section 232 tariffs on medium- and heavy-duty vehicles (trucks), parts and buses: The U.S. imposed a global tariff under Section 232 of 25% on imports of medium- and heavy-duty vehicles (MHDVs) and their parts and a 10% tariff on buses, effective November 1, 2025. The value of U.S. content in CUSMA compliant MHDVs is exempt from Section 232 tariffs (subject to the approval of the Secretary of Commerce on a model-by-model basis). CUSMA compliant MHDV parts are not subject to 25% tariffs until the Department of Commerce establishes a process to apply the tariffs exclusively to the non-U.S. content of auto parts. There is no exemption from the 10% tariff on imports of buses
  • Potential future 232 tariffs: Additional U.S. Section 232 tariffs could be authorized based on the eventual findings of ongoing Section 232 investigations on semiconductors; pharmaceuticals; personal protective equipment, medical consumables, equipment, and devices; critical minerals; commercial aircraft; robotics and industrial machinery; polysilicon and derivatives; unmanned aircraft systems; and wind turbines

The United States economy:

The U.S. economy remains the world's largest, with a per capita GDP of approximately US$86,142 (GDP of US$29.3 trillion and 340.1 million people), though growth is expected to slow to 1.7% in 2025 due to high interest rates and inflation. Further, the U.S is a global innovation leader, which creates an environment that attracts global companies to the United States to be closer to their suppliers and customers.

Forecast: The Economist Intelligence Unit expects U.S. real GDP growth to slow from 2.8% in 2024 to 1.7% in 2025, and further to 1.4% in 2026. Investment in artificial intelligence has provided a temporary boost, contributing 1.3% to growth in early 2025. Growth is forecast to strengthen to an average of 2.2% annually in 2027–2029, due to lower interest rates. Headline inflation is expected to remain slightly above the Federal Reserve's 2% target over the forecast period.

Canada-U.S. merchandise trade:

Canada-U.S. daily trade reached $3.6 billion in 2024. In 2024, the U.S. was Canada's top merchandise trading partner. Canada's total merchandise exports to the U.S. in 2024 stood at $596 billion, a 0.4% decrease over the previous year. Top exports to the U.S. were mineral fuels and oils ($178 billion); vehicles and parts ($72 billion); machinery ($44 billion); plastics ($20 billion) and electrical machinery and equipment ($18.6 billion). For the same year, Canada's total merchandise imports from the U.S. stood at $377.5 billion, an increase of 1.0% over the previous year. The top imports from the U.S. were vehicles and parts ($70.6 billion); machinery ($54 billion); mineral fuels and oils ($39 billion); electronics ($20.5 billion); and plastics ($18 billion).

Canada-U.S. trade balance:

The U.S. had a $85.9 billion (US$62 billion) merchandise trade deficit with Canada in 2024, largely due to Canadian energy exports to the United States. Excluding energy, the U.S. held a $47 billion (US$34.4 billion) trade surplus with Canada. This deficit is smaller than those with China ($404.8 billion) and Mexico ($234.9 billion). The U.S. has run a services trade surplus with Canada for over 20 years, reaching $45.5 billion in 2023. Since 2007, the U.S. has also maintained a surplus in manufacturing industry goods with Canada, standing at $49 billion in 2024 – making Canada the only top five trading partner with which the U.S. enjoys such a surplus. Additionally, U.S. trade with Canada supports manufacturing jobs – Canada sells inputs into U.S. manufacturing supply chains that are then turned into higher-value "Made in the USA" goods.

Despite President Trump's claim that the U.S. subsidizes Canada by $200 billion, no such direct subsidy exists. Trade deficits are not a "subsidy" but rather reflect highly integrated trade relations between two countries. The United States does not give anything for free by trading with Canada; it willingly purchases and obtains products it needs in return. The U.S. also sells more goods to Canada than to any other country.

Foreign direct investment:

In 2024, Canadian firms contributed $21.6 billion (US$15.8 billion) in U.S. capital investment, further reinforcing Canada's role as a key economic partner. Additionally, over 66% of American FDI in Canada in 2024 concentrated in three sectors:

  1. Management of companies and enterprises (35.8% or $244.6 billion)
  2. Finance and insurance (16.3% or $111.5 billion)
  3. Manufacturing (14.2% or $97 billion)

Canada-U.S. economic cooperation:

The U.S. remains an important trade and investment partner for Canada. Canada has complementary interests to the U.S. in areas such as economic security, critical minerals, energy, and supply chain resilience. Canada and the U.S. also have complementary interests in developing critical technologies, AI and quantum industries.

The U.S. administration sees economic security as a national security issue. It seeks to rebuild the U.S. domestic manufacturing capacity across a wide range of industrial sectors, achieve global energy dominance, and decouple certain sectors from China. It is also intensifying unilateral measures to maintain global leadership in quantum computing, artificial intelligence, semiconductors, as well as defence and other critical technologies. In the face of U.S. tariffs and trade uncertainty, Canada has launched a trade diversification strategy, which aims to double its exports to non-U.S. markets by 2035 and reduce its economic reliance on the United States.

Canada-United States-Mexico Agreement (CUSMA):

The North America Free Trade Agreement (NAFTA) was renegotiated in 2017-2019 following the election of the first Trump administration. The modernized Agreement, known in Canada as CUSMA (USMCA in the U.S.; T-MEC in Mexico) received bi-partisan approval from the U.S. congress, entering into force on July 1, 2020. The core of NAFTA, which eliminated virtually all tariffs between Canada, the U.S. and Mexico, was preserved in CUSMA with very few exceptions. CUSMA maintains these benefits and provides for the vast majority of North American trade to continue duty-free. CUSMA includes new chapters on good regulatory practices, customs administration, North American competitiveness and small and medium-sized enterprises. It modernizes disciplines for trade in goods and agriculture and for rules of origin, including, notably, automotive rules of origin. CUSMA includes a commitment to jointly review the Agreement starting on the sixth anniversary of its entry into force (July 1, 2026).

The upcoming mandated review of CUSMA presents an opportunity to reaffirm the agreement's success and ensure that it remains fit for purpose in a changing global landscape. Canada conducted a second round of public consultations (September 20 to November 3, 2025) to identify a wide range of both sensitivities and strategic opportunities ahead of the joint review, with a view to ensuring that CUSMA continues to reflect Canada's national interests and delivers real benefits to Canadians.

Diplomatic offices:

Canadian presence in the United States: Canada has an Embassy in Washington, D.C., 12 Consulates General (in Atlanta, Boston, Chicago, Dallas, Denver, Detroit, Los Angeles, Miami, Minneapolis, New York, San Francisco, and Seattle), 2 trade offices (Palo Alto and Houston), and 14 Honorary Consuls. The Trade Commissioner Service is present in all 15 Canadian missions/trade offices in the United States.

United States presence in Canada: The United States maintains an embassy in Ottawa and consulates in Calgary, Halifax, Montreal, Quebec City, Toronto, Vancouver, and Winnipeg.

Strategic Response Fund (SRF)

Question: What is the Strategic Response Fund and how will it help Canadian industry?

Key messages:

  • The Government of Canada has launched the Strategic Response Fund (SRF) to help Canada respond to a rapidly changing global economy marked by trade disruptions, supply chain volatility and intensifying international competition
  • The SRF is designed to drive Canada's industrial transformation and develop its long-term industrial capabilities to build economic resilience
  • The SRF builds on the mandate of the Strategic Innovation Fund (SIF), maintaining support for innovation and growth, while expanding its focus to include responsive, targeted investment to support trade-impacted sectors to adapt, pivot and diversify to new markets

Supplementary messages:

  • Under the recent $5 billion investment, the program is delivering flexible and timely support to strategic sectors impacted by U.S. tariffs and global trade risks – notably the automotive, steel, and aluminum and forestry sectors
  • The program is advancing with a first wave of tariff response projects in the coming months while continuing to build a robust project pipeline. The projects will help maintain and create jobs across these critical sectors, which in 2024 contributed over $43 billion in economic activity combined
  • SRF remains committed to advancing Canada's industrial and innovation capacity through support for large-scale innovative projects across critical sectors such as critical minerals, biomanufacturing and clean technology
  • The SRF will also continue to provide targeted support for Canada's artificial intelligence sector through the $700-million Artificial Intelligence (AI) Compute Challenge
  • The SRF maintains a portfolio of 151 active contribution agreements, including agreements absorbed from the SIF valued at $11.6 billion, leveraging almost $75 billion in total investment. These projects are expected to create and maintain over 150,000 jobs and 46,400 co-op opportunities, and support $33.8 billion in research and development
  • The SRF will seek to maintain industrial capacity by offsetting new market access costs, supporting retooling, and facilitating plans by Canada-based firms to expand or secure new markets

Background:

U.S. tariffs threaten billions of dollars in Canadian exports and tens of thousands of jobs. They also affect a wide range of Canadian exports, including a 25 percent duty on automobiles, and 50 percent on steel and aluminum products.

On September 5, 2025, the Government of Canada launched the Strategic Response Fund (SRF), including $5 billion to support businesses impacted by trade disruption to adapt, diversify their capabilities, and secure new markets. SRF will deliver timely, targeted funding to impacted firms across the Canadian economy, especially to those most profoundly affected, such as automotive, steel, aluminum and forestry.

The SRF replaces and builds upon on the mandate of the Strategic Innovation Fund (SIF). The SRF will maintain support for industrial innovation and the AI Compute Challenge while expanding its focus to include responsive, targeted investment to trade-impacted sectors. Across these priorities, the SRF provides investment in areas of strategic industrial advantage for Canada's long-term economic resilience and industrial future.

The SRF continues to support projects across all sectors of economy, including in areas of emerging importance such as defence and digital technologies such as AI and quantum. These sectors require investment as they transform the economy and are critical to long-term economic competitiveness and national security. The AI Compute Challenge is expected to lead to federal investments of up to $700 million to strengthen Canada's AI ecosystem by securing domestic AI data centers that uphold data sovereignty, offer secure and affordable compute access for innovative Canadian companies, and leverage Canada's advantages in sustainability and AI innovation.

The SRF focuses primarily on projects larger than $20 million, for contributions of $10 million and above, to ensure federal investments drive large-scale impact and meaningful industrial transformation. The program funds activities ranging from early-stage research and development (R&D) and commercialization to large-scale capital investments that modernize production, expand domestic capacity and strengthen Canada's AI ecosystem.

Supporting Canada's automotive industry: Zero-emission vehicles and electric vehicle Battery Investments

Question: What is the Government of Canada doing to support Canada's automotive sector, particularly as it transitions towards production of zero-emission vehicles (ZEVs)?

Key messages:

  • The Government of Canada supports the automotive industry's transition to electrification, which will help maintain and create jobs, promote economic growth and advance the shift towards a net-zero economy
  • Federal and provincial government collaboration with industry has attracted significant investments in recent years including the establishment of a Canadian battery supply chain
  • These investments are expected to maintain and create well-paying jobs and foster long-term growth in the automotive industry

Supplementary messages:

  • Canada has everything it needs to lead in the global electric vehicle (EV) ecosystem: strength in automotive manufacturing, a talented workforce, green energy, and critical minerals
  • In recent years, Canada attracted EV, battery, and battery materials manufacturing investments through a number of initiatives, including the Strategic Response Fund, Special Contribution Agreements tied to production, and Clean Technology manufacturing investment tax credits
  • These investments will establish the foundation for long-term growth. While the implementation timeframe for specific projects may vary with market conditions, Canada's automotive industry remains well positioned for long-term success
  • Canada is completing a review of the Electric Vehicle Availability Standard to make targeted regulatory adjustments to ensure it continues to reflect market realities, remains effective for Canadians, and does not place undue burden on automakers

Background:

The Canadian automotive sector supports over 125,000 direct jobs, contributed $16.8 billion in 2024 to Canada's gross domestic product, and is one of the country's largest export industries. The sector is anchored by the presence of five automotive manufacturers:

  1. Stellantis
  2. Ford
  3. General Motors (GM)
  4. Toyota
  5. Honda

That are supported by a diverse supply chain of nearly 700 automotive parts manufacturers across Canada. In 2024, Canada produced over 1.3 million vehicles, ranking 14th globally in terms of vehicle production.

In light of the global transition to electric transportation, the government stepped up: in recent years, Canada attracted key investments in EV, battery, and battery material manufacturing through a number of initiatives, including the Strategic Innovation Fund (Innovation Science and Economic Development – ISED), Special Contribution Agreements (ISED), and investment tax credits (Finance Canada). Some of these investments by the industry include:

  • Honda, investing $15 billion to create Canada's first comprehensive EV supply chain in Ontario, including EV, battery, and battery material manufacturing
  • NextStar Energy (Stellantis/LGES), investing $5 billion for an EV battery manufacturing plant in Windsor, Ontario
  • PowerCo, investing $7 billion for an EV battery manufacturing plant in St. Thomas, Ontario
  • GM/POSCO, investing $600 million to produce cathode active materials in Bécancour, Quebec

The Canadian automotive sector has also faced unfair competition from Chinese producers, who benefit from non-market policies and practices. In response, in August 2024 Canada announced a series of measures, including a 100% surtax on all Chinese-made EVs.

Meanwhile, the removal of the 2026 EV sales target under the Electric Vehicle Availability Standard, announced on September 5, 2025, aims to support the sector as it navigates immediate challenges from U.S. trade actions. The Government also undertook a 60-day review of the overall regulation through which stakeholders, including automotive companies, were consulted. Announced outcomes of the review will be forthcoming.

In addition to supporting these measures, the government is investing in public charging infrastructure to make EV ownership more accessible and convenient.

ACOA: Regional Tariff Response Initiative

Issue: Support for Atlantic Canadian businesses impacted by tariffs

Response:

  • The Government of Canada is focused on protecting Canadian industries, reinforcing the competitiveness of Canadian businesses and building one strong Canadian economy
  • The $1 billion Regional Tariff Response Initiative (RTRI) is being delivered by Canada's RDAs to support SMEs affected by tariffs, helping them respond, adapt, and compete amid shifting market conditions
  • In Atlantic Canada, ACOA is delivering $80 million under the RTRI to help impacted businesses diversify markets, boost productivity, strengthen supply chains, and unlock new opportunities for growth at home and abroad
  • SMEs are the backbone of Atlantic Canada's economy and communities, and success has always come from resilience, collaboration and a little grit – and together, we'll keep moving forward

Supplementary messages:

  • The RTRI was designed to be flexible and responsive to the specific needs of sectors in each region of the country
  • ACOA received dedicated funding under the RTRI to support businesses in Atlantic Canada, including those in industries like fish and seafood processing, and is focused on addressing trade-related challenges facing businesses across the region
  • RDAs are on the ground, helping businesses succeed. They collaborate with federal, provincial, and territorial partners and use complimentary and flexible programs to meet the unique needs of their regions

Background:

In March 2025, the government announced the Regional Tariff Response Initiative, a $450 million fund to support SMEs directly or indirectly impacted by U.S. and China tariffs, so they could step up investments to diversify their products and markets as well as adopt innovative technologies to boost competitiveness. In July 2025, the government announced that up to $150 million of the Regional Tariff Response Initiative would be targeted to projects in the steel sector.

On September 5, 2025, the Prime Minister announced that the Regional Tariff Response Initiative would be more than doubled going from $450 million to $1 billion over three years. The announcement included the ability for RDAs to provide non-repayable contributions of up to $1 million to businesses in all impacted sectors in order to allow more SMEs to invest in their growth, diversify markets, create new revenue sources by adopting innovative technologies and bringing new products and services to market.

On September 8, 2025, the Prime Minister announced that $80 million from the RTRI will be dedicated to businesses in Atlantic Canada.

The RTRI is designed to help impacted SMEs and sectors to boost productivity, catalyze growth and diversify markets by helping businesses to undertake projects to raise productivity, enhance competitiveness and reduce costs, thereby mitigating tariff impacts. Additionally, it seeks to strengthen resiliency among Canadian businesses through more robust domestic supply chains, enhanced internal trade, market diversification and future-proofing their operations.

Eligible recipients include:

  • Incorporated companies, corporations, co-operatives, or individuals operating a business
  • Indigenous-owned businesses and organizations
  • Non-profit organizations that support businesses

Applicants must demonstrate that they are directly or indirectly impacted by the ongoing trade disruptions, including imposed tariffs by the U.S. and China and Canadian counter-tariffs, and show that at least 25% of their sales are to the U.S. and/or to China, or demonstrate that they, or the businesses they support, have been directly affected.

The Regional Tariff Response Initiative is part of a broad set of tariff support measures, including the Workforce Alliances, Large Enterprise Tariff Loan Facility, the Business Development Bank of Canada's Pivot to Grow initiative, and the Strategic Response Fund. Together, these measures are reinforcing Canada's industrial strength and defending jobs across the country.

Defence Industrial Strategy

Question: How will the Defence Industrial Strategy (DIS) strengthen Canada's defence industrial base?

Key messages:

  • The Government of Canada is making generational investments in defence and security that will grow Canada's defence industry, drive innovation, and build long-term economic resilience
  • Budget 2025 lays the foundation for the Defence Industrial Strategy with a set of initial investments to improve access to capital, accelerate research and development, strengthen domestic supply chains, and grow critical resource stockpiles
  • The Defence Industrial Strategy will mobilize Canadian industry, grow national champions, and strengthen both economic and national security

Supplementary messages:

  • The DIS will be anchored in Canada's broader industrial plan, which aims to protect key sectors affected by tariffs, use domestic procurement to create jobs, and attract investment and talent to Canada
  • The DIS will include foundational commitments to build a more strategic and transparent partnership with industry, identify sovereign capabilities, and provide earlier and clearer demand signals to help firms met the evolving needs of the Canadian Armed Forces

Background:

  • In June 2025, Canada committed to reaching two percent of GDP on defence spending this fiscal year. Investments in defence will be anchored in a commitment by the Government to strengthen Canada's defence industrial base. Budget 2025 dedicated $6.6 billion over five years, including $2.1 billion for this fiscal year, for a number of measures in support of a forthcoming DIS. ISED and its portfolio organizations will lead and support several of these initiatives, including commitments for ISED to:
    • Develop and commercialize dual-use technologies across key industries such as aerospace, automotive, marine, cybersecurity, artificial intelligence, biodefence, and life sciences
    • Collaborate with National Research Council Canada (NRC) and Natural Sciences and Engineering Research Council of Canada (NSERC) to anchor quantum technology companies in Canada and create pathways for adoption in defence applications
    • Partner with NRC and NRCan to advance critical minerals processing technologies, support joint investments with Allies, and establish a national stockpiling mechanism
    • Work with DND and other partners to establish the Bureau of Research, Engineering and Advanced Leadership in Innovation and Science (BOREALIS)
  • The Budget also includes commitments for DND to establish a sovereign space launch capability, and for the Business Development Bank of Canada to create a new Defence and Security Business Mobilization Program to provide loans, venture capital, and advisory services to small and medium-sized enterprises (SMEs) contributing to Canada's defence industrial base
  • ISED continues to work closely with DND to advance the development of the DIS. The DIS' core objectives are to grow world-class firms in sovereign capability areas, establish Canada as a global leader in technologies with defence applications, strengthen and secure the resilience of Canada's supply chains, and establish enduring partnerships with both industry and Allies. The DIS will take a "build, partner, buy" approach by building up Canada's defence industrial capacity, partnering with key Allies, and buying key capabilities required to secure Canada's sovereignty

Canada's defence sector:

  • In 2022, Canada's defence sector contributed over $9.6 billion in gross domestic product (GDP) and approximately 81,200 jobs to the Canadian economy. The defence sector is 3.4 times more research and development (R&D) intensive than the manufacturing average, with the vast majority of R&D activities (77 percent) being funded by industry
  • Canada's defence sector is comprised of over 620 firms that develop goods and services with military applications. Small and medium-sized enterprises (SMEs) play a critical role in Canada's defence sector, making up 92 percent of firms, 40 percent of employment
  • The sector's revenues are balanced between domestic sales (51 percent) and exports (49 percent). In 2022, the United States (U.S.) accounted for 63 percent of total exports
  • The sector is national in scope, with regional areas of strength. It has established strengths in areas such as aircraft parts and maintenance, repair and overhaul (MRO), training and simulation, combat vehicles, munitions and shipbuilding , as well as significant potential in commercial technologies, such as aerospace, space, AI, quantum, and cyber

Canadian Critical Minerals Strategy

Question: How is Canada unlocking the full value of its critical minerals in partnership with our international allies?

Key messages:

  • Government industrial policy is further leveraging Canada's abundant natural resources and rich mining and manufacturing legacy to solidify a position as a global leader in responsible critical minerals development and use
  • Accelerating the development of Canada's resources, in partnership with industry and allies, will diversify strategic supply chains, reinforce Canadian sovereignty, and create high value economic opportunities from coast-to-coast
  • Enhancing collaboration and trade with international partners reinforces the country's reputation as a place to do business, ensuring Canada remains a trusted industrial partner and attractive to new investment
  • Informed by the Canadian Critical Mineral Strategy, and with launch of new programs and initiatives, including the Critical Minerals Production Alliance, the Critical Minerals Sovereign Fund, the First and Last Mile Fund, and the expansion of tax credits, the Government is working at pace to enhance the competitiveness of Canada's critical minerals industry – up an downstream
  • The Government has also allocated $1.5 billion to the Strategic Response Fund (SRF) to support innovative critical minerals projects across the industrial value chain as part of the Canadian Critical Minerals Strategy
  • Finally, rebuilding our defence industrial capacity is a national security imperative. To that end we are focussed on developing products that involve critical minerals with dual-use potential for both commercial and military applications, and which are essential to ensuring defence industrial capacity in Canada and allied nations

Supplementary messages:

  • Canada has long been a strategic partner for high-quality, responsibly sourced critical minerals. These new investments in mining and mineral processing industries will bolster our global economic competitiveness and demonstrate our reliability in times of crisis
  • Critical minerals are the building blocks of modern defence industries. They power our jets, ships, communications and the technologies that keep Canadians. As modern military technologies continue to evolve, securing access to a range of critical minerals is now a global imperative
  • Canada is well placed to take advantage of this opportunity with abundant natural resources and clean energy supply. Canada is one of only a few countries with the resource base to supply both base defence metals (like aluminum, nickel, copper) and critical minerals (like REEs, cobalt, tungsten, scandium) that underpin modern defence sectors

Background:

Canada is a leading global producer of copper, nickel and cobalt and hosts advanced mineral projects for rare earth elements, lithium, graphite and vanadium. Canada is leveraging its mining prowess, and strong environmental, social and governance (ESG) credentials to create competitive supply chains for critical minerals and value-added products, processes and technologies. In 2023, the mining and minerals sector contributed $159 billion, or 6 percent of Canada's GDP, supporting 711,000 high-quality direct and indirect jobs. At $144,630, the average annual total compensation per job in the mining industry is almost twice the all-industry average.

Canada is capitalizing on the rising global demand for critical minerals by building vertically integrated supply chains, adding value and jobs here at home and reinforcing our global leadership in responsible mineral development. The development of value-added capabilities in Canada's critical minerals sector presents a once-in-a-generation opportunity. However, realizing this potential will depend on overcoming gaps in domestic mineral processing, materials manufacturing, and recycling capacity.

Critical minerals are also essential to modern defence systems because of their unique chemical and physical properties such as strength-to-weight ratio, heat resistance, conductivity, and magnetism. They are used in aircraft and aerospace systems, electronics and communications, weapons systems, energy storage ad power, surveillance and navigation systems, and in armour and protective equipment. To ensure the resilience of these strategic supply chains, the G7 Critical Minerals Production Alliance leverages sovereign tools to operationalize projects that will expand global critical minerals trade. The goal of the Alliance is to bring new critical mineral projects into production more quickly with exacting standards that drive inclusive economic growth and protect national security.

Through the Canadian Critical Minerals Strategy, the Strategic Response Fund (SRF) is being deployed as a tool to accelerate project development. Budget 2022 provided $1.5 billion aimed at accelerating investments in critical minerals projects. These investments under the SRF will help build resiliency along critical mineral supply chains and bolster Canada's global economic competitiveness. Currently, the program is working closely with companies to increase Canada's supply strategic materials such as lithium, copper, scandium and titanium essential to clean energy, defence, and advanced technology manufacturing supply chains. In addition, the SRF is mandated to help grow domestic production of strategic, defence-related minerals, and position Canada as a reliable partner in global security and the critical mineral supply chain as part of Canada's Defence Industrial Strategy (DIS).

Given the capital-intensive and high-risk nature of the minerals and metals industry, many projects struggle to secure the private financing needed to move into construction. To address this, the government is deploying a suite of financial tools including the Critical Minerals Infrastructure Fund, the Canada Infrastructure Bank, Export Development Canada, and the Canada Growth Fund to provide tailored support aligned with individual project and company needs. The government is also moving quickly to establish newly announced programs, including the Critical Minerals Sovereign Fund and the First and Last Mile Fund.

Clean technology

Question: What is the Government of Canada doing to support advances in clean technology, and the adoption and commercialization of cleantech?

Key messages:

  • Made-in-Canada clean technologies will help Canada become the world's leading energy superpower, while fighting climate change
  • The Government of Canada is accelerating the adoption of clean technologies by Canadian businesses through a Climate Competitiveness Strategy that will drive investments to grow the economy, diversify trade and strengthen Canada's sovereignty, all while decreasing greenhouse gas emissions in key sectors
  • Measures designed to strengthen Canada's industrial carbon price, expand clean investment tax credits, streamline climate regulations and enhance market access will help cleantech companies scale up, commercialize their intellectual property, and export their innovations. This approach to climate competitiveness is just one way that the Government of Canada will make Canada the strongest economy in the G7

Supplementary messages:

  • The Government of Canada is strengthening Canada's leadership in a low-carbon economy by investing in technologies, incentives, and supports that increase productivity and innovation, and boost market access for Canadian exports
  • By strengthening industrial carbon pricing and clean investment tax credits, ensuring regulations are fit for purpose, expanding the global scope of international cleantech demonstration projects and supporting the development of voluntary sustainable finance guidelines, the Government of Canada is committed to a clean, productive and growing economy
  • Canada is considered a world leader in cleantech due to a history of fostering innovative start-ups across a range of technology solutions, including methane detection and abatement, carbon capture and storage, nuclear fusion, clean artificial intelligence and long-duration energy storage
  • In 2023, the cleantech sector employed more than 224,000 people. Clean technology businesses contributed more than $40.1 billion to the Canadian economy and exported $9.4 billion in goods and services

Background:

Budget 2025 outlines the Government of Canada's plan to invest in and accelerate major projects, drive productivity and catalyze investments to build a stronger economy, transform Canada's strategic industries, and protect our sovereignty and security. Budget 2025 measures of relevance to Canada's cleantech sector include:

  1. Climate Competitiveness Strategy

    The Climate Competitiveness Strategy will create the conditions for the investment needed to build an affordable net-zero future in which Canadian businesses are well-positioned to compete and succeed in the global economy. Key commitments under the Strategy total $589 million, over 5 years. The Strategy includes, among other measures:

    Strengthened industrial carbon pricing: More certainty will be brought to Canada's carbon pricing system by developing a carbon pricing trajectory that targets net-zero by 2050 and improving the application of the federal benchmark, ensuring all provincial-territorial industrial pricing systems are harmonised and provide a common, strong price signal. These changes will provide certainty to industry and opportunities to Canadian companies with carbon-reducing technologies.

    Expansion and extension of investment tax credits:

    • Clean technology: Expands eligibility to systems that produce electricity and/or heat from waste biomass. The eligibility requirements for small nuclear energy property will also be changed
    • Clean hydrogen: Expands eligibility to include clean hydrogen produced from methane
    • Clean electricity: Introduces the credit, including eligibility for provincial and territorial crown corporations, supporting clean electricity investment while reducing administrative burden
    • Carbon capture, utilization and storage: Extends, by five years, the availability of the full credit rates for this ITC, which would apply from 2031 to 2035. Credit rates would remain unchanged from 2036 to 2040
    • Clean technology manufacturing: Expands the list of critical minerals eligible for this ITC to support investments in the extraction, processing, and recycling of co-product and by-product critical minerals
    • Domestic content requirements: The government will consult on a domestic content requirement under the Clean Technology and Clean Electricity investment tax credits

    Clarity on GHG regulations:

    The Government will work to advance the goals of the Clean Electricity Regulations, and will finalize the enhanced methane regulations, working with provinces and territories to negotiate equivalency agreements. In addition, the Government will not legislate an emissions cap, provided that federal-provincial-territorial agreement is reached on carbon markets and enhanced methane regulations, and that substantial investments in Carbon Capture Utilization and Storage (CCUC) are made. These measures will make our industries more competitive, while incentivizing traditional sectors to seek out cleantech solutions to decarbonize their operations.

  2. Trade diversification

    Budget 2025 includes initiatives to help Canadian exporters reach new markets:

    Clean Technology Demonstration initiative:

    Budget 2025 proposes to provide $39.9 million over four years, starting in 2026-27, and $11.1 million ongoing to the National Research Council of Canada's Industrial Research Assistance Program to expand the Clean Technology Demonstration initiative to global markets.

    SME Export Readiness Initiative:

    Budget 2025 proposes to provide $46.5 million over four years, starting in 2026-27, to Innovation, Science and Economic Development Canada (ISED) for the SME Export Readiness Initiative, to support training for SMEs with limited exporting experience to build capacity to make informed, strategic decisions as they diversify trade. This will help Canadian firms access and be successful in new international markets and increase economic resilience.

    New trade missions to Europe:

    Budget 2025 proposes to provide $8 million over four years, starting in 2026-27, and $2 million ongoing, to Global Affairs Canada to deepen trade relations with European partners by undertaking new trade missions with Canadian businesses and supporting Canadian Chambers of Commerce in Europe.

    Nuclear energy promotion:

    Budget 2025 proposes to provide $4.2 million over three years, starting in 2027-28, and $1.4 million ongoing to Natural Resources Canada to maintain capacity to promote nuclear energy exports and strategic engagement in key export markets.

Concessional trade finance:

Export Development Canada will launch a $2 billion concessional trade finance envelope, from its existing envelope and Global Affairs Canada departmental resources, to help exporters in key sectors—such as infrastructure and clean technology—to engage in projects in fast-growing economies, particularly in the Indo-Pacific region and in the reconstruction of Ukraine's critical infrastructure.

Canada Growth Fund:

Budget 2023 announced that the Canada Growth Fund (CGF) will use carbon contracts for difference (CCfD) as a means to support clean growth projects, by providing a backstop to the future price of, for example, carbon or hydrogen, providing predictability that helps to de-risk major projects that cut Canada's emissions.

Budget 2025 confirmed that the CGF will continue to issue contracts as a means of further improving future carbon price certainty for investors making large, long-duration capital investments.

In October 2025, the Government announced a $2 billion investment, through the CGF, in support of the Darlington New Nuclear Project in Bowmanville, ON. The project is one of five major nation-building projects referred to the newly-created Major Projects Office.

Softwood lumber support

Question: How is the Government of Canada supporting the softwood lumber industry?

Key messages:

  • The softwood lumber industry is a critical component of the Canadian economy, and the backbone of many rural and remote communities across the country
  • The government is committed to building a stronger, more resilient industry through a series of measures including $1.2 billion in loan guarantees, $500 million to advance product and market diversification, and prioritizing the use of Canadian lumber in federal procurement
  • Additionally, the Strategic Response Fund and Regional Tariff Response Initiative will support firms in tariff-impacted industries, such as the forest sector, advance projects to increase resilience and access new markets
  • Lastly, and to support the transformation of the sector in the long-term, the government will launch a Canadian Forest Sector Transformation Task Force to develop a roadmap to support and reposition the industry

Supplementary messages:

  • The Government of Canada has launched the Strategic Response Fund to help Canada respond to a rapidly changing global economy marked by trade disruptions, supply chain volatility and intensifying international competition
  • Under the recent $5 billion investment, the program is delivering flexible and timely support with a focus on strategic sectors disproportionately exposed to U.S. tariffs and global trade risks – notably the automotive, steel, and aluminum and forestry sectors
  • The Business Development Bank of Canada (BDC) is delivering supports to businesses dealing with the ongoing Canada-U.S. trade dispute, including dedicated financing for companies in the softwood lumber sector
  • On November 26, the Government of Canada expanded BDC's Softwood Lumber Guarantee Program by committing an additional $500 million, for a total of $1.2 billion to date, to support the sector
  • The Government of Canada is also committing $500 million over three years to renew and expand existing Natural Resources Canada (NRCan) forest-sector programs focused on innovation and market diversification
  • Other measures the Government of Canada has introduced include reskilling and work sharing programs for employers, and a Buy Canadian Policy which will prioritize the procurement of Canadian lumber products

Background:

The softwood lumber industry is a key pillar of Canada's highly integrated forest sector supplying other industries such as pulp and paper, engineered wood products and bioenergy. The sector is a significant economic driver for rural and Indigenous communities in Canada, providing jobs in harvesting and other operations – two-thirds of forest product sector employees live in rural, remote and indigenous communities. In 2024, the forest sector provided over 194,000 direct jobs, including 11,000 for Indigenous workers, and contributed more than $21 billion to GDP.

The softwood lumber industry is highly export-dependent, as over half of all softwood lumber produced in Canada is exported to foreign markets. The industry is also heavily reliant on the U.S. market in particular. In 2024, $7.3 billion in softwood lumber was exported to the U.S., representing nearly 90% of Canadian softwood exports. 

In August 2025, the U.S. increased antidumping and countervailing duties on Canadian softwood lumber exports to a combined rate of 35.19 percent. Since 2017, duties and bonds paid have tied up over $10 billion in capital from domestic softwood lumber exporters. Additionally, following a Section 232 investigation on timber, lumber and certain wood products, the US implemented a further 10 percent tariff on softwood lumber imports resulting in an effective tariff rate of approximately 45 percent.

A Buy Canada Policy to protect, build and transform Canadian strategic industries

Question: What is the government doing to build a Buy Canadian policy?

Key messages:

  • The Government of Canada is working to build the strongest, most resilient economy in the G7
  • The Buy Canadian Policy strengthens Canada's economic sovereignty by prioritizing local business and suppliers for federal procurement, creating good jobs across the country
  • Budget 2025 investments put this policy into action by expanding opportunities for small and medium-sized businesses, building capacity in key strategic sectors of the economy (including artificial intelligence), and providing a roadmap for provinces, territories and municipalities to apply similar guidelines in their own procurement

Supplementary messages:

If Pressed: Crown Corporations/Grants and contributions:

  • This Policy applies to federal Crown corporations including the Business Development Bank of Canada, Standards Council of Canada, and Destination Canada
  • Federal business support programs will be used to further support the Buy Canadian policy by investing in the expansion of Canadian manufacturing, commercialization opportunities and Made-in-Canada solutions

Background:
Public sector procurement can be an important customer for Canadian businesses and suppliers. The Government of Canada has prioritized purchasing Canadian products to support economic development and growth. Key actions have included the One Canadian Economy Act, targeted supports for the steel and softwood lumber industry, expanding liquidity support through the Business Development Bank of Canada, targeted actions through a national Defence Industrial Strategy, and a new Strategic Response Fund.

The proposed Buy Canadian policy would expand existing measures to be commodity-agnostic and more broadly applied to leverage a significantly larger portion of federal spending to strengthen Canada's economic resilience, industrial capacity, domestic supply chains, and export diversification. Budget 2025 proposes to provide $98.2 million over five years, starting in 2026-27, and $9.8 million ongoing to Public Services and Procurement Canada (PSPC) and $7.7 million over three years, starting in 2026-27, to the Treasury Board Secretariat to support the implementation of the new Buy Canadian policy. Budget 2025 also proposes to provide ISED with $79.9 million over five years, starting in 2026-27, to support the Small and Medium Business Procurement Program.

The Buy Canadian policy is intended to be a key element in establishing a new industrial policy, helping to transform Canada's economy – from one of reliance on specific trade partners to one that is more resilient to global shocks and built on the solid foundation of strong Canadian industries. To move from an approach of "best effort" to a clear obligation to support Canadian industries, the government's new Buy Canadian policy would:

  • Ensure that the federal government buys from Canadian suppliers: Introduce new measures to prioritize Canadian suppliers, and their products, in all federal spending. The government will launch a new Policy on Prioritizing Canadian Materials in Federal Procurement to require domestic and foreign suppliers contracting with the federal government to source key materials from Canadian companies in defence and construction procurements exceeding a certain threshold. This will initially cover Canadian steel and softwood lumber and will be sufficiently flexible to adjust the parameters to include additional domestic materials
  • Require local content and purchases from trusted partners when Canadian suppliers are truly unavailable, requiring approvals so such cases remain the exception not the norm: There will be times when the government cannot purchase goods and services entirely made in Canada, often because the capacity does not exist or certain inputs cannot be sourced domestically. To address this, the government will implement new local content requirements so that strategic procurement, which cannot be completed by Canadian suppliers, still require the use of Canadian content. This will ensure that Canadians benefit from federal spending, even when foreign suppliers are involved. The government also intends to implement the Policy on Reciprocal Procurement, to ensure non-defence procurements are limited to Canadian goods and services as well as those originating from Canada's trading partners. This will include supplier eligibility being based on the origin of goods and services being offered
  • Expand the approach to infrastructure spending, grants, contributions, loans and other federal funding streams: The government intends to support building Canada strong through major infrastructure projects, a modern defence industry, and millions more homes. Each year federal organizations spend billions of dollars supporting major infrastructure projects and other purchases by other levels of government. Buy Canadian aims to make the government a force for nation-building – becoming our own best customer, protecting Canadian businesses, and empowering our workers with high-paying careers that build prosperity at home
  • Streamline regulation and introduce new supports to ensure businesses can access federal procurement: The government will cut red tape and streamline its processes to make sure that businesses can access federal procurement opportunities more easily. To facilitate the implementation of the Buy Canadian policy, the government will also implement regulatory amendments to ensure that Buy Canadian aspects of federal procurement processes are not subject to review by the Canadian International Trade Tribunal
  • Help small and medium-sized enterprises (SMEs) access federal procurement: The Buy-Canadian policy includes plans to establish a Small and Medium Business Procurement Program to establish processes that will help Canadian SMEs access federal contracts and compete on a level playing field. Additional investments for ISED would provide scaled support to help Canadian SMEs bring new technologies to market by using federal procurement to test, validate, and scale made-in-Canada innovations, deepening Canada's industrial capabilities, and supporting commercialization and business growth
  • Apply this mandate to federal agencies and crown corporations to the government leverages all the dollars at our disposal: Federal procurement requirements to date have applied to federal public service organizations but have not applied to federal agencies and crown corporations, which are responsible for billions of dollars of federal spending. This new approach will extend to all federal agencies and Crown corporations, leveraging every public dollar to strengthen Canada's economy, create jobs, and building capacity at home. Within ISED and Portfolio, this includes the Business Development Bank of Canada, Standards Council of Canada, and Destination Canada
  • Provide a roadmap that can be adopted by provinces, territories, and municipalities to ensure alignment across jurisdictions, avoid conflicting procurement rules, reduce burden on suppliers and ensure Buy Canadian efforts reinforce each other while respecting Canada's trade commitments

Recruiting international talent

Key messages:

  • Investments in research are foundational to building the economy of the future. World-class research talent is essential to drive innovation, strengthen Canada's resilience, and maintain leadership in a rapidly changing global economy
  • Budget 2025 announced up to $1.7 billion to recruit top international research talent, enhancing Canada's global competitiveness and contributing to the economy of the future
  • Canada welcomes leading researchers from around the world. By embracing diverse expertise and offering a stable, collaborative research environment, Canada will strengthen its innovation ecosystem and accelerate breakthroughs to address complex challenges

Supplementary messages:

  • Canada is building on its dynamic and diverse research ecosystem by recruiting top international talent, in alignment with the Government of Canada's priority areas
  • This investment builds on the government's longstanding support for research. Budget 2024 provided $825 million to increase the value and number of scholarships and fellowships and $1.8 billion to increase research grant funding
  • This investment strengthens Canada's talent pipeline and research capacity in areas critical to economic growth and social well-being, positioning Canada as a world-leading science and innovation hub, now and in the future

Background:

  • Canada's research talent is among the best in the world, thanks in part to the government's strong support for research and innovation. For example, Budget 2024 provided $825 million to increase the annual value and number of scholarships and fellowships to support the next generation of talent. It also provided $1.8 billion to the federal granting councils to increase research grant funding
  • Budget 2025 committed $1.7 billion to attract top international research talent, following the mandate letter commitment to attract global talent to strengthen Canada's economy. This initiative is part of the International Talent Attraction Strategy and Action Plan, led by Immigration, Refugees and Citizenship Canada. The strategy seizes the opportunity to recruit leading researchers who are seeking opportunities abroad due to funding cuts and policy changes in the United States
  • Canada's stable research ecosystem, global credibility, strong academic and institutional foundations, and international collaboration are attractive to global research talent
  • The talent attraction initiative announced in Budget 2025 aims to recruit over a thousand researchers. It includes funding to the three federal granting agencies for:
    • Research Chairs focused on transformational and translational research ($1 billion over 13 years)
    • Doctoral and postdoctoral researchers ($133.6 million over three years)
    • Assistant professors ($120 million over 12 years)
  • To ensure attractive recruitment packages, Budget 2025 also provides $400 million over seven years for the Canada Foundation of Innovation (CFI) to deliver research infrastructure support for the recruited Chairs. Together, these investments will make Canada an attractive choice for global researchers at a time of increased competition for highly-skilled talent
  • Immigration, Refugees and Citizenship Canada will deliver dedicated support and accelerated processing for the recruited researchers
  • This investment will target priority areas associated with the future economy and current strengths. It will bolster the research capacity needed to produce the innovations that drive national prosperity, resilience and wellbeing
  • This initiative will complement Canada's existing talent. Canada's research enterprise is supported through the federal research granting agencies (Natural Sciences and Engineering Research Council, Social Sciences and Humanities Research Council, and Canadian Institutes of Health Research) and the CFI. Investments through these organizations develop highly qualified talent and produce the breakthroughs that drive innovation
  • By working alongside global leaders, Canadian researchers and graduate students will gain invaluable training and mentorship, helping strengthen research teams and attract additional highly qualified people to Canada

Canada's National Quantum Strategy

Question: What is the Government of Canada doing to support the quantum sector in Canada?

Key messages:

  • Quantum science studies how the smallest particles behave, and discoveries in this field will change how we do everything from new medicines, to better batteries, to faster computers
  • As an early leader in this field, Canada launched its National Quantum Strategy in 2023 to help the quantum sector grow and increase its economic impact, helping make Canada the strongest economy in the G7
  • The Strategy builds on Canada's quantum science strengths, and will help turn research and discoveries into economic opportunities that benefit all Canadians

Supplementary messages:

  • With a $360 million investment, the National Quantum Strategy has three missions: advance quantum computers and software, quantum communications and quantum sensors. These missions will be advanced through investments in three pillars: research, talent, and commercialization
  • To create the Strategy, the Government of Canada consulted stakeholders and the public. These consultations also helped create roadmaps to guide how the three missions will be achieved
  • The government will continue to work with scientists and industries to make the Strategy a success and keep Canada as a leader in new quantum technology and innovation

Background:

Quantum science:

Quantum science is the study, manipulation and control of systems at the atomic and subatomic levels. Recent advances have enabled greater control of systems to perform tasks with higher precision.

Quantum technologies, spanning computing, sensing, and communications, will have far superior capabilities to technologies in use today, disrupting many sectors.

Quantum technologies have the potential to grow the economy and create jobs. A 2024 study commissioned by the National Research Council of Canada estimates that by 2045 quantum technology could contribute $17.7 billion to Canada's GDP and over 157,000 jobs.

Canada and quantum science:

Canada is a leader in quantum science, having invested more than $1 billion since 2012, including in several universities and companies, some of which have pioneered world firsts.

Key clusters of activity are located in greater Vancouver, Calgary-Edmonton, Ottawa-Toronto-Waterloo, greater Montréal, Sherbrooke, and Québec City. While the sector has attracted investment, some funding gaps remain.

National Quantum Strategy:

On January 13, 2023, the government launched the National Quantum Strategy, backed by a $360 million investment announced in Budget 2021.

The strategy prioritizes three missions:

  1. Make Canada a world leader in the continued development, deployment and use of quantum computing hardware and software
  2. Ensure the privacy and cybersecurity of Canadians in a quantum-enabled world through a national secure quantum communication network and a post-quantum cryptography initiative
  3. Enable the Government of Canada and key industries to be developers and early adopters of new quantum sensing technologies

To achieve the missions, the strategy focuses on three pillars:

  1. Research ($141 million)
  2. Talent ($45 million)
  3. Commercialization ($169 million)

To coordinate this work, approximately time-limited funding of $4.5 million has been allocated to the creation of a National Quantum Strategy Secretariat.

A Quantum Advisory Council has also been established to provide impartial advice to the government to help grow the quantum sector and ensure that the strategy remains on track. The Council is co-chaired by Dr. Stephanie Simmons and Dr. Raymond Laflamme.

In February 2025, the government published mission roadmaps that were developed in close consultation with Canada's quantum community. The roadmaps describe the challenges, gaps and opportunities related to each mission and actions to tackle them. They include short-, medium- and long-term objectives to encourage coordinated actions by federal and provincial governments, academia, industry, and not-for-profits.

The government already engages regularly with provincial governments on quantum technologies and will continue to seek out collaboration opportunities or expand activities and partnerships with all provinces and territories.

National security:

In the future, quantum computers could be used to break commonly-used cryptography, posing a threat to data, privacy, critical infrastructure and national security. Canada has the expertise to develop commercial solutions to reduce these risks.

Federal government partners are working together to address quantum security concerns. The strategy's communications mission will seek to make Canada's communications more secure, ensuring privacy and data protection.

Skills strategy

Question: How will Canada protect its labour market during the forthcoming CUSMA negotiations and broader efforts to diversify trade relationships?

Key messages:

  • The Government is building one national economy where highly-educated and skilled Canadian workers produce goods in Canada, supporting domestic businesses and consumers, and expanding into new markets
  • In our response to global uncertainties, we are working with workers, labour movements, industries, and companies to fight for every single job. We know our workers need us now and we will stand with them
  • The Government is moving quickly to protect and strengthen the sectors most affected by tariffs – introducing new measures to help workers gain new skills, support businesses as they modernise and diversify, and boost domestic demand for Canadian goods
  • Looking to the future, the government is committed to building a resilient, future-ready workforce by strategically investing in Canada's research capacity and attracting top global talent to accelerate innovation and drive economic growth

Supplementary messages:

  • Canada ranks first among OECD countries for the level of post-secondary attainment among 25- to 64-year-olds (63 percent in 2025)
  • Budget 2025 is structured to ensure that Canada's research and innovation outputs are more aligned to become direct economic drivers and tools to modernize Canada's physical, digital, and industrial national assets
  • Canada's revamped industrial plan, anchored by the new $5 billion Strategic Response Fund (SRF), to safeguard key sectors, create new high-value jobs, and attract investment and world‑leading talent to help build a strong and prosperous Canada by providing targeted support for tariff‑exposed industries so they can adapt to global trade disruptions, strengthen supply chains, expand into new markets, and boost the country's industrial capacity
  • The Defence Industrial Strategy will create opportunity for Canadian businesses and workers by building sovereign defence capacity, boosting domestic industrial growth and generating new high-quality jobs through strategic investment in innovation, supply chains, and domestic procurement
  • Canada is taking steps to protect its key industries, starting with steel and lumber workers and businesses. We will start by investing over $100 million to support employers with Work-Sharing agreements and training for employees on reduced hours, helping up to 26,000 workers

Background:

Economic resilience and job creation:

  • The government is protecting Canadian workers by helping businesses adapt and thrive in this new global economy
  • In March 2025, the government initially announced enhancements to the Employment Insurance Work-Sharing Program. An $100 million investment over the next two years. This measure will increase the income replacement and provide new training for eligible workers, helping up to 26,000 Canadian workers in various sectors, including steel and lumber
  • On September 5, 2025, the Government announced a $382 million investment over five years, plus $56 million ongoing for ESDC, to address urgent labour market challenges and foster collaboration among government, employers, unions, and industry groups. This initiative introduces a two-part approach: establishing up to five Workforce Alliances to coordinate skills development and investment in sectors under pressure or with growth potential and launching the Sectoral Workforce Investment Fund (SWIF) to support projects that help businesses recruit and retain talent. Together, these measures aim to drive economic growth, support restructuring linked to tariffs and leverage private investment for workforce development
  • On November 26, 2025, building on previously announced measures to help transform the Canadian steel and softwood lumber industries, the following new skills initiatives were announced:
    • Steel industry: $70 million under Labour Market Development Agreements (LMDA) to provide training and income supports for up to 10,000 affected steel workers to ensure that ensure workers have the skills and support they need to meet the future needs of the industry
    • Softwood lumber industry: $50 million for upskilling, reskilling, and income supports for more than 6,000 affected softwood lumber workers through the Labour Market Development Agreements (LMDA), helping them adapt to new technologies, strengthen their expertise, and excel in changing industries

Immigration:

  • Canada's immigration strategies are essential for attracting, retaining, and growing talent, allocating labour to productive activities, and alleviating the constraint of Canada's aging population. Immigration is critical to maintaining access to a high-skilled workforce, especially in areas where there are long-term skills challenges and in priority areas (e.g., defence and dual-use technologies)
  • Canada announced its Immigration Levels Plan for 2026-2028 on November 4, 2025, via Immigration, Refugees and Citizenship Canada (IRCC), stabilizing permanent resident admissions at 380,000 annually, while reducing new temporary resident arrivals. The plan prioritizes economic immigration (about 64% of totals), with 239,800 economic class admissions in 2026 rising to 244,700 in 2027-2028
  • ISED's priority sectors will continue to be able to access international talent, given that IRCC's Comprehensive Ranking System (CRS) and the Category-Based Selection process prioritize the highly educated workers and STEM workers in high demand across the workforce

International talent attraction (H-1B Visa):

  • The U.S. has announced a series of changes to the H-1B visa program impacting some skilled workers' ability to access the H-1B visa stream when recruited by employers
  • Budget 2025 announced plans for Canada to launch an accelerated immigration pathway specifically for U.S. H-1B visa holders, aiming to attract skilled workers impacted by U.S. Policy changes, including those in healthcare and advanced industries, where global talent will help to address Canadian skill shortages and bolster innovation

Government mandate letter

May 21, 2025

Dear Colleagues

Last month, Canadians elected a new Government to stand up for our country and to build a strong economy that works for everyone. As members of the 30th Ministry, we must fulfill this mandate with purpose and force. We must meet a series of unprecedented challenges with both a disciplined focus on core priorities and new approaches to governing.

The Context: A Generational Challenge

Canada faces a series of crises. In a more dangerous and divided world, geopolitical risks are rising, threatening our sovereignty. The global trading system – which has helped power Canada's prosperity for decades – is undergoing the biggest transformation since the fall of the Berlin Wall. At home, our longstanding weak productivity is straining government finances, making life less affordable for Canadian families, and threatening to undermine the sustainability of vital social programs on which Canadians rely.

The new federal Government has an immense responsibility to address these challenges head on with focus, determination, and fundamentally different approaches to governing.

We must redefine Canada's international, commercial, and security relationships. In the process, we need to develop a defence industrial policy that secures Canada, fulfills our responsibilities to our allies, and helps build our economy.

Canada must build an enormous amount of new infrastructure at speeds not seen in generations. This includes the infrastructure to diversify our trading relationships; to become an energy superpower in both clean and conventional energies; to restore affordability to housing; and to secure our borders and our communities.

The combination of the scale of this infrastructure build and the transformative nature of artificial intelligence (AI) will create opportunities for millions of Canadians to find new rewarding careers – provided they have timely access to the education and training they need to develop the necessary skills.

Government itself must become much more productive by deploying AI at scale, by focusing on results over spending, and by using scarce tax dollars to catalyse multiples of private investment.

Our Priorities

We will focus on seven priorities:

  1. Establishing a new economic and security relationship with the United States and strengthening our collaboration with reliable trading partners and allies around the world.
  2. Building one Canadian economy by removing barriers to interprovincial trade and identifying and expediting nation-building projects that will connect and transform our country.
  3. Bringing down costs for Canadians and helping them to get ahead.
  4. Making housing more affordable by unleashing the power of public-private cooperation, catalysing a modern housing industry, and creating new careers in the skilled trades.
  5. Protecting Canadian sovereignty and keeping Canadians safe by strengthening the Canadian Armed Forces, securing our borders, and reinforcing law enforcement.
  6. Attracting the best talent in the world to help build our economy, while returning our overall immigration rates to sustainable levels.
  7. Spending less on government operations so that Canadians can invest more in the people and businesses that will build the strongest economy in the G7.

Working Together

We must deliver for Canadians as a team committed to real Cabinet government. The attainment of these objectives will require collaboration and coordination within Cabinet. I expect each Cabinet committee, led by their Chair, to drive and monitor our progress, with oversight from the Priorities, Planning and Strategy Committee, and direction from the full Cabinet.

While fulfilling your core responsibilities as a member of the Ministry, you should identify how specifically you can contribute to these missions. You will be expected and empowered to lead, and to bring new ideas, clear focus, and decisive action to your work. Over the coming weeks, I will look to each of you to identify the key goals and measures of success on which to evaluate the results you will achieve for Canadians as a member of the Ministry.

We will work together with Parliamentarians and the public service. We will work in true partnership with provinces, territories, and Indigenous Peoples. And we will bring together labour, business, and civil society to build a Canada worthy of our children and grandchildren.

In addressing the tasks before us, we must remain true to Canadian values. Canada is a dynamic country that celebrates our diversity, cares for the most vulnerable among us, and strives for a better future for all. The new federal Government will continue the vital work of advancing reconciliation with Indigenous Peoples. We will fight climate change. We will uphold the rule of law, protect our democratic institutions, and reinforce the unity of our country.

Canada's challenges are not small, but we can more than meet them with vigour and a constructive approach. That is how Canadians have built the best country in the world. That is how we will build it to be even better.

In partnership,

The Rt. Hon. Mark Carney,
Prime Minister of Canada

International Trade Committee (CIIT) biographies

Chair: Hon. Judy A. Sgro (LPC – Humber River-Black Creek, ON)

Liberal

Election to the house of commons:

  • First Elected: 1999
  • Re-Elected: 2000, 2004, 2006, 2008, 2011, 2015, 2019, 2021, and 2025

Professional background:

  • Municipal Politics: North York City Council (1987 – 1994); Toronto City Council (1994 – 1999); At the municipal level, Sgro focused on poverty and crime reduction

Political and parliamentary roles:

  • Former Parliamentary Secretary: Parliamentary Secretary to the Minister of Public Works and Government Services (2003)

Committee membership:

  • Chair:
    • Standing Committee on International Trade CIIT (2020 – Present)
    • Liaison Committee (2016 – Present)
    • Standing Committee on Transport, Infrastructure and Communities TRAN (2016 – 2019)
  • Vice-Chair: Standing Committee on Industry, Science and Technology (2013 – 2015)
  • Member: Special Committee on the COVID-19 Pandemic (2020)

Points of interest to GAC:

  • CIIT: In accordance with conventions concerning the role of committee Chairs, MP Sgro is often impartial and asks few questions during CIIT meetings
  • Human Rights Advocacy: During House of Commons proceedings, often refers to human rights abuses in Hong Kong (Jimmy Lai) as well as Russia's invasion of Ukraine

Vice-chair: Adam Chambers (CPC – Simcoe-Nord, ON)

Conservative

Election to the house of commons:

  • First Elected: 2021
  • Re-Elected: 2025

Professional background:

  • Education: Holds a law degree and MBA from the University of Western Ontario (2011)
  • Insurance: Former Assistant Vice President, Virtual Advice, at Canada Life (2019-2021)
  • Political: Former Director of Policy to Finance Minister Jim Flaherty (2014)
  • Entrepreneur: Runs an online education business, Ontariolawexam.com

Political and parliamentary roles:

  • CPC Critic for International Trade (2025- Present)
  • Legislation: CPC Critic for Government Bill C-5, Free Trade and Labour Mobility Act

Committee membership:

  • Vice-Chair: Standing Committee on International Trade CIIT (2025 – Present)
  • Member: Standing Committee on Finance FINA (2021-2025)

Points of interest to GAC:

  • CIIT: On July 11, Chambers sent a letter to the CIIT Chair, signed by all CPC CIIT members, that the committee reconvene given President Trump's tariff announcement of 35% tariffs on Canadian imports starting August 1. Instead, a GAC and AAFC briefing on CUSMA was provided to members
  • Can-U.S.: During House debate for MINT's Committee of the Whole appearance in June 2025, Chambers focused questions on the Digital Services Tax (DST), Chinese electric vehicle mandate, the status of Can-U.S. trade negotiations, tariffs and counter-tariff measures
  • Trade Mobility: Frequently advocates for interprovincial trade liberalization

Vice-chair: Simon-Pierre Savard-Tremblay (BQ – Saint-Hyacinthe-Bagot, QC)

Bloc Québécois

Election to the house of commons:

  • First Elected: 2019
  • Re-Elected: 2021, 2025

Professional background:

  • Studies: Bachelor's degree in political sciences, master's degree in Sociology, and a PhD in Sociology and development
  • Columnist:
    • Columnist at Radio VM (2015 – 2019);
    • Columnist at Le Mag (2017 – 2019);
    • Columnist at Cogéco 106,9 Fm Mauricie (2016 – 2019);
    • Columnist at La Vie Agricole (2017 – 2019)
  • Blogger: Blogger at Le Journal de Montréal (2016 – 2019)

Political and parliamentary roles:

  • BQ Critic for International Trade and National Defence

Committee membership:

  • Vice-Chair:
    • Standing Committee on International Trade CIIT (2020 – Present)
    • Standing Committee on National Defense NDDN (2025- Present)

Points of interest to GAC:

  • Softwood Lumber: Has spoken often about softwood lumber and the U.S.' increased countervailing and anti-dumping duties
  • Steel and Aluminum: Often raises the impact of U.S. tariffs on the Quebec steel, aluminum, and manufacturing sectors
  • Forced Labour in Supply Chains: Has consistently urged the government to introduce legislation to address the issue of Canada's CUSMA commitment to monitor and prevent the import of forced-labour goods from China. Introduced a motion at CIIT for the committee to study the issue- study will begin this Fall
  • Canada-China relations: during recent CIIT meetings, focused several questions on Canada-China relations, including on trade agreements
  • Transparency during Trade negotiations: Is supportive and has discussed at committee the BQ Bill S-228, requiring all treaties to receive parliamentary scrutiny before their ratification
  • Investor-State Dispute Settlement (ISDS): In committee, often discourages the inclusion of ISDS provisions in Trade agreements and poses questions to gauge public opinion on dispute settlement mechanisms

Yasir Naqvi (PLC – Ottawa-Centre, ON)

Liberal

Election to the house of commons:

  • First Elected: 2021
  • Re-Elected: 2025

Professional background:

  • Education: McMaster University (BA, BSc), University of Ottawa (LLB), Carleton University (MA), Rotman School of Management
  • Legal & Academic: Lawyer specializing in international trade law; former CEO of the Institute for Canadian Citizenship
  • Provincial Politics: Ontario MPP for Ottawa Centre (2007–2018); served as Attorney General, Minister of Labour, and Minister of Community Safety and Correctional Services

Political and parliamentary roles:

  • Parliamentary Secretary to the Minister of International Trade and to the Secretary of State (International Development) (2025- Present)

Committee membership:

  • Member: Standing Committee on International Trade (2025- Present)

Points of interest to GAC:

  • CUSMA negotiations: In recent CIIT meetings, raised concerns over US non-compliance with CUSMA rules exempting Canadian vehicles from US tariffs
  • Multilateral Engagement: Active in parliamentary diplomacy across Europe, Asia, and Africa
  • Free Trade Advocate: Introduced a motion for CIIT to undertake a study on the importance of free and ethical trade, to be studied in September 2025
  • Civic Inclusion: Advocates for democratic participation and newcomer integration

Matt Jeneroux - (PCC – Cypress Hills-Grassands, Saskatchewan)

Conservative

Election to the house of commons:

  • First Elected: 2015
  • Re-Elected: 2019, 2021 and 2025

Professional background:

  • Studies: Bachelor of Arts from the University of Alberta
  • Provincial Politics: MP of the Progressive Conservative Party at the Legislative Assembly of Alberta (2012 – 2015)
  • Public Service: Advisor, Strategic Policy and Planning at Health Canada (2008 – 2012)
  • Mental Health: Founder of the Hi Dad Foundation to raise awareness for the importance of men's mental health for families (2022 – Present)

Political and parliamentary roles:

  • CPC Critic for Supply Chain Issues

Committee membership:

  • Member:
    • Standing Committee on International Trade CIIT (2023 – Present),
    • Standing Committee on Transport, Infrastructure and Communities TRAN (2023- 2025)

Points of interest to GAC:

  • Supply chains: Has spoken at committee on the importance of stronger and more resilient domestic and foreign supply chain networks and infrastructure. Small business advocate
  • Softwood Lumber: At CIIT, Jeneroux frequently discusses the impacts of U.S. softwood lumber tariffs on Canadian forestry workers and the sector at large
  • Carbon Border Adjustment Mechanisms (CBAM): Has been critical of the government's consultation process regarding the implementation of CBAMs
  • CBSA CARM System: At committee, critical of the government's implementation of CBSA new border customs collection initiative

Peter Fonseca (PLC – Mississauga-Est – Cooksville, ON)

Liberal

Election to the house of commons:

  • First Elected: 2015
  • Re-Elected: 2019, 2021, 2025

Professional background:

  • Athletics: Former Olympic marathon runner (1996 Atlanta Games)
  • Management Consultant and Entrepreneur
  • Provincial Politics:
    • Ontario MPP (2003–2011);
    • Minister of Labour and Tourism

Committee membership:

  • Chair: Standing Committee on Finance (2021 – 2025)
  • Member: Standing Committee on International Trade (2025- Present)

Points of interest to GAC:

  • EU & US Trade: Active in CETA and CUSMA discussions in the House
  • Border Security: During Bill C-5, One Canadian Economy Act, debate, spoke in support of government efforts to intercept illegal goods to Canada
  • SME Development: Strong advocate for small business access to global markets
  • Trade policy: In recent CIIT meetings, MP Fonseca asked about Team Canada's role in negotiations, and trade policy goals

Jason Groleau (PCC Beauce – QC)

Conservative

Election to the house of commons:

  • First Elected: 2025

Professional background:

  • Business Leader: Owner of grocery stores, restaurants and bars in Saint-Georges and Saint-Éphrem, Quebec
  • Athletics: Former Professional Hockey Player

Committee membership:

  • Member: Standing Committee on International Trade CIIT (2025-Present)

Points of interest to GAC:

  • Automotive Sector: Opposed restrictions on gas-powered vehicle sales
  • Industrial Infrastructure and Critical Minerals: Critical of the lack of industrial infrastructure to extract Canadian natural resources and critical minerals. Has advocated for large-scale battery recycling industrial infrastructure
  • Francophone Engagement: Active in Assemblée parlementaire de la Francophonie
  • Trade barriers: Critical of interprovincial trade barriers, recommending harmonization of CFIA standards in recent CIIT meetings

Trade agreements: asked questions on GAC consultation process on trade agreements, and on negotiations with the US

  • As a new MP, Groleau has made limited public statements

Jacob Mantle (PCC – York Durham, ON)

Conservative

Election to the house of commons:

  • First Elected: 2025

Professional background:

  • Education: Queen's University (Political Science & Law)
  • Legal: International trade lawyer at Osler, Hoskin & Harcourt
  • Municipal Politics: Uxbridge, ON, City Councillor (2010–2014)

Committee membership:

  • Member: Standing Committee on International Trade CIIT (2025-Present)

Points of interest to GAC:

  • Trade Law: Specializes in economic regulations and sanctions
  • Can-US: During MINT's June 2025 Committee of the Whole appearance, Mantle posed several questions on softwood lumber duty rates
  • At CIIT, Mantle has focused his questions for the government on trade negotiation transparency and consultation processes, as well as the impact of Canada's recognition of the State of Palestine on upcoming CUSMA negotiations. He sought from the government public submissions made during the recently initiated CUSMA renegotiation public consultation. He has also focused on technical barriers to trade under Canada's FTAs
  • Mantle frequently asks "yes or no" questions of GAC officials during appearances before committee

Linda Lapointe (PLC – Rivière-Des-Milles-Îles, QC)

Liberal

Election to the house of commons:

  • First Elected: 2015
  • Re-Elected: 2025

Professional background:

  • Business: Former owner of Provigo Lapointe et Fille
  • Provincial Politics: Assemblée Nationale Du Quebec MNA for Groulx (2007–2008)
  • Community Leadership: President of Boisbriand Business Association

Political and parliamentary roles:

  • Deputy Government Whip (2018–2019)
  • President: Liberal Women's Caucus (2025 – Present)

Committee membership:

  • Vice-Chair: Standing Committee on Access to Information, Privacy and Ethics ETHI (2025- Present)
  • Member: Standing Committee on International Trade CIIT (2025- Present)

Points of interest to GAC:

  • Trade Agreements: Active in CETA, CPTPP, and CUSMA discussions during House proceedings. In recent CIIT meetings, focused on how US tariffs have influenced Canada's negotiation approach, as well as agricultural trade priorities
  • Trade Diversification: During Debate on Bill C-5, One Canadian Economy Act, spoke in support of Canada diversifying trade relationships
  • Ethics & Privacy: Advocates for digital transparency and consumer protection

Steeve Lavoie (PLC – Beauport – Limoilou, Québec)

Liberal

Election to the house of commons:

  • First Elected: 2025

Professional background:

  • Business Leadership: Former President and Chief Executive Officer for the Quebec Chamber of Commerce and Industry (2020-2024)
  • Banker:
    • Former Associate Vice-President, Enterprises for Banque Nationale (2018-2020).
    • Various Positions at Banque Nationale (2000-2020)

Committee membership:

  • Member: Standing Committee on International Trade (2025 – Present)

Points of interest to GAC:

  • Community Engagement: Advocate for regional economic development
  • Access to global markets: In recent CIIT meetings, asked about barriers faced by small and medium-sized enterprises in accessing global markets
  • As new MP, Lavoie has made limited public statements
 Report a problem
Date modified: