Canadian manufacturer eyes U.S. as firms ‘cannot hold off for too long anymore’

A Canadian textile manufacturer, Fine Cotton Factory Inc., is expanding its operations south of the border after being hit hard by U.S. tariffs, demonstrating how the trade conflict could have a lasting impact on the Canadian manufacturing industry. The company, which produces fabrics for clothing, mattresses, and bedding at its Toronto facility, saw a significant drop in sales from U.S. customers due to tariffs of up to 50 percent on some products.

As orders began to recover, the company started to shift some production to the United States to reduce its exposure to tariffs on finished goods. Skip Kann, executive vice-president of sales and marketing at Fine Cotton Factory, plans to open a U.S. warehouse and begin production early next year, despite the lingering concerns over the Canada-U.S. trade relationship.

The fear and uncertainty surrounding potential trade disruptions may influence manufacturers' investment decisions for years to come, according to Pau Pujolás, an associate professor of economics at McMaster University. Despite the presence of tariffs, the broader economic picture shows that Canadian manufacturing investment in the United States has not yet increased significantly, according to Ari Van Assche, a professor of international business at HEC Montréal.