Employment in Equipment Manufacturing in Canada Fell in 2025, Group Says

Why It Matters

The employment dip signals vulnerability in a sector that contributes nearly 1% of Canada’s GDP, while trade policy and government support will shape its recovery trajectory.

Key Takeaways

• Direct employment fell 1.9% in 2025, hitting 147,000 jobs
• Critical minerals and infrastructure investment softened the employment decline
• CUSMA review slated for summer could reshape tariff landscape
• Canada’s equipment exports fell 2.2% to U.S., less than UK’s 35.3% drop
• Federal government added $0.74B CAD program and $0.37B CAD diversification fund

Pulse Analysis

The off‑highway equipment manufacturing sector remains a cornerstone of Canada’s industrial base, supporting 147,000 jobs and contributing about $17.8 billion USD in value added. While 2025 saw a 1.9% dip in direct employment, the industry’s resilience stems from ongoing critical‑minerals development and federal infrastructure projects that have mitigated broader weakness in housing construction and agricultural equipment demand. These dynamics illustrate how targeted investment can offset cyclical downturns in a capital‑intensive segment.

Trade policy continues to loom large over the sector’s outlook. The Canada‑U.S‑Mexico Agreement (CUSMA) shields roughly 85% of Canadian equipment exports from tariffs, a factor that helped limit the U.S. export decline to 2.2%—far better than the 35.3% slump in the United Kingdom and the 28.6% drop in Germany. Nonetheless, high‑tariff pressures and the upcoming CUSMA review this summer introduce uncertainty, prompting manufacturers to diversify markets and reinforce North‑American supply‑chain integration to preserve competitiveness.

In response, the federal government has rolled out a CAD 1 billion ($0.74 billion USD) financing initiative, administered by the Business Development Bank of Canada, to offset tariff impacts, alongside a CAD 500 million ($0.37 billion USD) boost for small‑firm product diversification. These measures aim to sustain employment, encourage technology upgrades, and position the industry for a rebound as global demand stabilizes. Continued policy support and strategic export diversification will be critical for preserving the sector’s contribution to Canada’s GDP and its role in the broader manufacturing ecosystem.