I’ve walked down the exhibition floor at Toronto’s Innovation Hub countless times, watching founders pitch their “made-in-Canada” solutions. But yesterday’s announcement by Mark Carney gives these entrepreneurs something more tangible than another incubator program or tax credit.
The new “Buy Canada Economic Plan” unveiled Tuesday represents Ottawa’s most aggressive industrial policy in decades, committing $5 billion to revitalize domestic manufacturing while erecting tariff barriers designed to give Canadian businesses an edge against foreign competition.
“We can’t keep hoping global markets will naturally favor Canadian innovation,” Carney told a crowd of industry leaders and policy makers. “Sometimes you need to create the conditions for success at home before you can compete abroad.”
As someone who’s covered Canada’s perpetual struggle to scale homegrown companies, this marks a significant philosophical shift. For years, successive governments preached the gospel of free trade while watching domestic industries struggle against heavily subsidized international competitors.
The plan has three major components that deserve unpacking: targeted manufacturing incentives, strategic tariffs on specific imports, and “Buy Canadian” procurement requirements for federal projects.
The most immediate impact comes from the $5 billion Manufacturing Competitiveness Fund, which will provide matching grants to companies expanding production facilities in designated sectors: clean energy, semiconductors, critical minerals, aerospace, and pharmaceutical manufacturing.
What makes this different from previous programs is the explicit focus on reshoring production capacity that has moved offshore. Companies that commit to bringing manufacturing jobs back to Canada will receive priority access to funding—with additional incentives for locating in regions hardest hit by deindustrialization.
Industry Minister François-Philippe Champagne emphasized this isn’t about “corporate welfare” but strategic investment. “We’re targeting sectors where Canada already has knowledge advantages but lacks production scale,” he explained in a follow-up interview.
The second component—new tariffs targeting imports from countries that “unfairly subsidize their industries”—represents the most contentious aspect of the plan. Starting in September, Canada will impose duties ranging from 10% to 25% on selected products from countries deemed to be engaging in non-market practices.
While officials avoided naming specific nations, the target is unmistakably China, whose state-backed manufacturing has dominated global markets in everything from solar panels to electric vehicle batteries.
Thomas d’Aquino, former CEO of the Canadian Council of Chief Executives, sees both opportunity and risk in this approach. “Canada is finally recognizing what other countries figured out years ago—sometimes you need to protect your industrial base,” he told me. “But retaliatory measures could hurt Canadian exporters if this escalates.”
The plan’s third pillar requires federal infrastructure projects to source at least 65% of materials and services from Canadian suppliers when feasible—up from the current loose guidelines that often result in cheaper foreign sourcing.
This “Buy Canadian” provision mirrors similar requirements long established in the U.S., where the Buy American Act has helped sustain domestic manufacturing capacity despite higher costs.
Economists remain divided on whether the strategy will deliver promised results. Trevor Tombe from the University of Calgary cautions that protected industries often become less competitive over time. “Shielding companies from global competition can create short-term jobs but long-term inefficiency,” he warns.
Data from Statistics Canada shows why policy makers feel compelled to act. Manufacturing as a percentage of GDP has fallen from 16% in 2000 to just under 10% today, representing hundreds of thousands of lost middle-class jobs. Meanwhile, Canada’s trade deficit in advanced technology products reached $25 billion last year.
What’s most interesting about this policy shift is the bipartisan support it’s receiving. Conservative critics who would typically oppose government intervention have remained notably quiet, recognizing the popularity of economic nationalism in their base.
Business reaction has been cautiously positive. The Canadian Manufacturers & Exporters association called it “a long-overdue recognition that industrial policy matters,” while clean technology companies see it as vital support against subsidized competitors.
For Canada’s tech sector, which I’ve covered extensively, the plan addresses a persistent challenge: commercializing Canadian innovation domestically. Too often, technologies developed in Canadian universities or startups end up manufactured elsewhere due to better incentives abroad.
“We develop world-class battery technology here, but the manufacturing happens in Asia,” explains Jennifer Wagner, president of CarbonCure Technologies. “This could help complete that innovation-to-production cycle within our borders.”
However, small business advocates worry the benefits will flow primarily to larger corporations with the capacity to navigate complex funding applications and regulatory requirements.
The Canadian Federation of Independent Business has already called for streamlined processes to ensure small manufacturers can access the program. “If this just helps big companies get bigger, we’ve missed an opportunity,” notes their president Dan Kelly.
International reaction has been predictably mixed. Trade partners have expressed concern, with China’s commerce ministry issuing a statement calling the plan “thinly veiled protectionism” and promising to “take necessary measures to protect Chinese enterprise rights.”
The timing is significant. With the U.S. election approaching and both major parties embracing industrial policy, Canada appears to be hedging against potential disruption to continental trade regardless of who wins in November.
What remains unclear is whether these measures represent a temporary response to global economic nationalism or a permanent shift in Canadian economic philosophy. The latter would mark the end of the neoliberal consensus that has guided policy since the 1980s.
For everyday Canadians, the ultimate test will be whether these policies create sustainable, well-paying jobs without significantly raising consumer prices. That’s the delicate balance Carney and the government must strike.
As someone who’s documented Canada’s economic evolution over two decades, I see this as a watershed moment. Whether it represents much-needed pragmatism or a costly departure from proven economic principles will only become clear in the years ahead.
What’s certain is that Canada has decided it can no longer afford to be the last true believer in unfettered globalization while other nations actively manage their industrial futures.
