Last Friday, S&P Global announced that Canada’s manufacturing sector expanded in April. Canada’s key manufacturing sector weakened considerably in 2025 as the US imposed significant tariffs on Canada’s economy. The Canadian government’s efforts to diversify trade has helped Canada’s manufacturing sector in 2026, as evidenced by higher export orders in April. Still, several sectors are facing considerable challenges in response to the tariffs, which prompted the government to announce a large loan program yesterday designed to support those sectors.

• The S&P Global Canada Manufacturing Purchasing Managers Index rose to 53.3 in April from 50.0 in the previous month. This marked its largest expansion since 2022.
• The manufacturing sector benefited from stronger new orders. In particular, foreign orders were a main driver of growth. This also helped lift production to its highest level since 2022.
• Higher prices are making their way to manufacturing activities. Input costs rose in April at their highest level in almost four years. Fuel and freight costs surged higher over the month.
• Despite the recent improvement, some sectors of Canada’s economy continue to struggle amid the weight of US tariffs. These include critical sectors such as automotive, aluminum, steel and lumber.
• Yesterday, Canada’s federal government announced a $1-billion loan program for the steel, aluminum and copper industries. The loans will have favourable terms and offer some immediate relief to companies feeling the pressure from high tariffs and allow them to adapt for the future. The government will also add $500 million to the Regional Tariff Response Initiative.

Canada’s manufacturing sector saw strong improvement in April. Optimism among manufacturers also increased in April; however, there is still some concern about how the Mideast conflict will impact prices and global economic activity. The support of the Canadian federal government for some key sectors may further help boost Canada’s overall manufacturing activity.

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