Canada wants to rebuild its manufacturing sector, but it’s losing the immigrant workers it needs

The trade war with the United States has put manufacturing at the centre of Canada’s economic agenda by exposing its dependence on a single trading partner. U.S. tariffs on Canadian steel, aluminum, automobiles and other products have disrupted cross-border supply chains, reduced exports in key industries and increased costs for manufacturers, while leaving businesses uncertain about future trade conditions. In response, the federal government is trying to strengthen Canada’s domestic industrial capacity and reduce its reliance on the American market. Read more: Tariffs are reshaping Canadian manufacturing, but not all workers are being impacted the same way A Buy Canadian policy now prioritizes Canadian suppliers and domestic materials in federal procurement, while Ottawa’s Defence Industrial Strategy aims to create 125,000 jobs by expanding domestic defence production. Prime Minister Mark Carney has also pledged to double non-U.S. exports within a decade. However, these initiatives say little about the people who will do the work. Canada’s industrial ambitions depend on having a skilled and available workforce, yet the tariff shock is affecting who works in Canadian factories. Our analysis of Statistics Canada’s Labour Force Survey suggests immigrant workers are bearing a disproportionate share of the employment losses. A recomposition of the factory floor Manufacturing employment fell by only about three per cent between January 2025 and April 2026. But Statistics Canada’s Labour Force Survey shows a more substantial change in who holds those jobs. Monthly estimates for smaller population groups can fluctuate considerably, but the pattern points to a growing disadvantage for immigrant workers. Immigrants’ share of manufacturing employment slipped from just over 30 per cent to under 28 per cent by December 2025, and has recovered only slightly since. The furnace is monitored at Nexans Canada Inc., a copper rod and wire manufacturer in Montréal on Oct. 29, 2026. THE CANADIAN PRESS/Christinne Muschi The losses have come in waves. In 2025, immigrant workers accounted for a growing share of manufacturing job losses, before Canadian-born workers also began experiencing more layoffs as trade pressures persisted. By April 2026, immigrants remained disproportionately affected. Nearly two-thirds of unemployed immigrants who had previously worked in manufacturing reported losing their jobs, compared with fewer than half of their Canadian-born counterparts, even as job loss became a less common reason for unemployment across the sector. These losses also appear more permanent. More than half of unemployed immigrant manufacturing workers reported a permanent layoff in April 2026, compared with about 43 per cent of Canadian-born workers. Share of unemployed former manufacturing workers who reported a temporary or permanent layoff. (Statistics Canada/Labour Force Survey), CC BY-NC This coincided with the April 2026 decision in the U.S. to extend steel, aluminum and copper tariffs to the full customs value of covered products, including certain derivative goods, rather than just their metal content. The skills Canada risks losing Immigrant manufacturing workers are twice as likely as Canadian-born workers to hold a university degree — close to 40 per cent, compared with 20 per cent. This partly reflects Canada’s immigration system, which awards significant points for education when selecting economic immigrants. Yet higher education has not translated into better employment outcomes. Immigrant manufacturing workers earned nearly $3 an hour less than Canadian-born workers in April 2026, a gap that has widened since late 2025. One reason is that immigrants’ credentials are often discounted. Nationally, more than one-quarter of university-educated immigrants work in jobs requiring no more than a high school education, more than double the rate for Canadian-born graduates. In manufacturing, immigrant workers hold far more degrees than their Canadian-born co-workers, yet earn less, suggesting many are working below their qualifications. Those roles, with shorter tenure and lower pay, are also more exposed to layoffs. Canada will need engineers, technicians and quality specialists as it expands defence production, shipbuilding and advanced manufacturing. Many immigrants with these skills are already here, but are not working in their fields. In Ontario, internationally educated engineering graduates outnumber those with Canadian engineering degrees, yet only 18 per cent work as engineers, compared with 40 per cent of Canadian graduates. Recognizing these credentials could be the fastest way to fill the skills gaps an expanding sector will face. Immigrant manufacturing workers are more educated but earn less than their Canadian-born counterparts. (Statistics Canada/Labour Force Survey), CC BY-NC The disadvantages facing immigrant women The employment changes are also gendered. Women make up about one-third of immigrant manufacturing workers, compared with just over one-quarter of Canadian-born workers. When tariffs landed in spring 2025, women’s share of employment among immigrant manufacturing workers fell by two percentage points, while the share among Canadian-born workers barely moved. Over the first eight months of 2025, immigrant women’s share of the overall manufacturing workforce shrank while Canadian-born women’s grew. Caregiving responsibilities, language requirements and difficulties getting foreign credentials recognized can make it more difficult for them to return to work after a layoff. Women’s share of the manufacturing workforce by immigrant status. (Statistics Canada/Labour Force Survey), CC BY-NC Defence and advanced manufacturing are among the most male-dominated parts of the sector. Women are manufacturing’s largest untapped talent pool, and industry groups have long argued that recruiting more women is key to easing chronic skills shortages in manufacturing. Losing immigrant women already in the workforce further shrinks that talent pool, making it harder to fill the jobs Canada’s expanding industrial sector will create. Policies pulling in opposite directions Federal policy has not adequately addressed the vulnerabilities immigrant workers face. In August, Ottawa announced a $7.5-billion tariff-response package to support businesses and workers affected by U.S. tariffs. It includes additional income support, workplace training and a new Workforce Retention and Retraining Program. But these initiatives do not specifically address the employment barriers facing immigrants. The same month, Ottawa launched the Advanced Manufacturing Workforce Alliance, one of six sector alliances designed to map skills gaps, align training with industry needs and help firms adopt new technologies. It brings together manufacturers, unions and training institutions. But the launch announcement makes no mention of immigrant workers or credential recognition, referring only broadly to underrepresented groups. Identifying the skills of immigrants already in the sector could help move them into the roles an expanding industry will need. Meanwhile, some services immigrants rely on to enter and navigate the labour market are shrinking. Settlement funding outside Québec is expected to decrease by about $98 million in 2026-27, and advanced language training is being phased out. These reductions could make it harder for newcomers to develop the language skills, professional connections and other supports needed to find suitable employment. The Buy Canadian framework sets out no workforce provisions. Canada is pledging to build more at home while weakening the systems that help skilled newcomers move into the jobs that effort requires. Building a better industrial strategy Canada has good reason to diversify its markets and strengthen domestic production as manufacturers continue to navigate uncertainty with their largest trading partner. Trade tensions with the U.S. are likely to remain a defining challenge for Canadian manufacturing. The July review of the Canada-United States-Mexico Agreement ended without a deal to extend the pact, though it remains in force until 2036. Expanding domestic production, however, requires workers with the skills to sustain it. An industrial strategy must therefore make workforce retention a priority. Canada cannot strengthen its manufacturing sector while overlooking the immigrant workers already contributing to it or failing to recognize the skills of those who could contribute more. If Canada wants to make more of what it needs at home, it must stop losing the skilled people it has already recruited to make it.