Import Penetration Into the Manufacturing Sector

Import penetration in the Canadian manufacturing sector is influenced by several factors. These include global economic conditions, currency fluctuations, trade policies and the competitiveness of domestic industries. China's rising export capacity has been a significant driver of import penetration. Additionally, trade exposure varies across regions, with Quebec and Ontario experiencing higher levels of import competition due to their concentration of manufacturing industries.

The decline in import penetration between 2020 and 2025 can be attributed to various factors. The COVID-19 pandemic disrupted global supply chains, leading to higher demand for domestic goods. Furthermore, recent trade tensions, particularly with the United States, have impacted certain trade flows.

Domestic factors have also played a role in the decline of import penetration. The manufacturing sector has faced challenges since the early 2000s, including high tax and regulatory burdens, as well as labor and skill shortages. These issues may have prompted efforts to strengthen domestic production, potentially reducing reliance on imports. Additionally, changes in consumer preferences towards locally produced goods and efforts to diversify the Canadian manufacturing sector could contribute to lower import penetration rates in recent years.