Canada's manufacturing sector is mired in a deep slump, with the April Manufacturing PMI dropping to 45.3, a new low since May 2020, shrinking for 11 consecutive months. The output index plunged to 42.7 and the new orders index to 41.2, hitting capital goods producers particularly hard. Uncertainties in US tariff policies have led companies to postpone decisions, and 75% of Canadian exports to the US (steel, aluminum, autos) are facing a 25% tariff shock. Retaliatory measures have exacerbated supply - chain disruptions.
The Bank of Canada warns that a prolonged trade war could lead to an economic recession and push inflation above 3%. Although the future output index has slightly risen to 50.4, reflecting companies' fragile hope for a stable environment next year, confidence remains at a historical low. Analysts believe that the weakness in the manufacturing sector is likely to drag down the second - quarter GDP, and policymakers are faced with a dilemma of stabilizing growth while controlling inflation.
The trade war between Canada and the US has cast a dark cloud over Canada's manufacturing industry. With the continuous shrinkage of the manufacturing sector, the economic outlook is worrying. The impact of trade policies on the manufacturing industry is profound, and how to deal with the challenges brought about by the trade war has become an important issue for Canada.
