Why Canada needs to become a manufacturing superpower by buying and upgrading Canadian resources
For far too long, Canada has underutilized its vast natural resources in infrastructure development. We have been fine with exporting raw materials, letting other countries, mostly the United States, refine these products and then buying them back as higher value products.
In 2023, Canada exported almost $150B in raw minerals, mostly metals, while we imported over $280B manufactured goods from the U.S. alone. Canada’s resource-based industry is not that different from that of Ghana or the Ivory Coast, which produce precious raw cocoa, only to have the profit margins be absorbed by Switzerland or France branding the chocolates global customers consume.
From lumber to steel, it’s time Canada moves up the value chain — or risk being left behind in the global economic race.
The tariffs announced by the U.S., now on pause for 30 days, will force Canada to confront our dependency on U.S. manufacturing with even more urgency than we reacted to the price increases and inflation caused by import dependencies during the COVID pandemic.
Canada has an existential choice that will define its standing for the rest of the 21st century. We need to decide if we want to be like Japan or Taiwan with high-end manufacturing or continue to be just a raw mineral provider for other manufacturers globally.
We constantly buy steel, cement and energy from international parties instead of prioritizing Canadian interdependence, contradicting not just environmental goals, but economic prosperity and growth for other Canadians. Domestic sourcing can offer significant, tangible benefits for Canadians in every province, and for Canada as a whole.
Manufacturing supports 1.7 million direct jobs across Canada and generates CAD $200B annually. We already provide raw materials used across the world for manufacturing high-value products. By using Canadian resources, and upgrading them locally, Canada could supercharge its industrial base and its economy.
Canada has already shown that it can do this in other industries — cleaner and setting higher standards for the world. We have world-class innovators in Canada that are sought by U.S. and international investors alike. Instead of doubling down on these winners, we continue to choose to let others incorporate the value in the supply chain instead of capturing it ourselves.
For example, Quebec produces the world’s greenest aluminum (94 per cent hydro-powered), yet only 35 per cent gets value-added processing domestically before export. Canada supplies 30 per cent of global potash but manufactures just 12 per cent of advanced crop nutrition products locally. While leading in lumber exports (21 per cent global market share), we import 65 per cent of engineered wood products used in domestic construction.
We need an ambitious plan to become a self-reliant manufacturing superpower. Here are some things we can do to take on the most important mission of our generation:
1. Incentivize circular innovation
Rather than just taxing imports, we can incentivize ‘Made in Canada’ products through instruments like the Canada Growth Fund and the Canada Infrastructure Bank. Expanding tax credits for projects using more than 75 per cent Canadian materials would entice multinational and blue-chip Canadian companies to manufacture in Canada.We can mandate ‘Buy Domestic’ provisions in all federally funded infrastructure projects exceeding $10M and accelerate waste-to-resource initiatives like Alberta’s Bitumen Beyond Combustion programs.
Prioritizing local sourcing of materials could have profound short- and long-term impacts for Canada. Consider the construction of AI infrastructure in our tech hubs. By using ArcelorMittal Dofasco’s zero-carbon steel (coming online 2028) and Lehigh Hanson’s Edmonton or CRH’s Mississauga low-carbon cements, we could accelerate the adoption of new technologies and sustain long-term Canadian jobs in both the steel and cement sectors.
2. Radically incentivize interprovincial collaboration
We need a critical and urgent focus on overcoming provincial silos. Specifically, we should fast-track the Impact Assessment Act’s ‘One Project, One Review’ system for critical mineral mines and associated manufacturing. We should prioritize pan-Canadian supply chain projects and build them as quickly as possible.We should fast-track the $9B Atlantic Loop connecting Quebec hydro to New Brunswick and Nova Scotia, and should seek to rapidly harmonize building codes through the National Research Council to enable use of advanced, domestically sourced materials like Quebec’s low-carbon aluminum in BC infrastructure projects.
We should also create federal tax incentives for interprovincial clean energy partnerships and implement “First-Canada” transmission pricing with discounts for domestic users.
3. Future-proof through R&D
We should focus our vast research and development resources on amplifying our domestic supply chains and create a critical mass of manufacturing. The U.S. has already begun efforts to onshore critical mineral production and bring semiconductor manufacturing back. Canada needs to do the same.
After WWII, Canada demonstrated global leadership through major projects like the St. Lawrence Seaway and Trans-Canada Highway projects. We can do it again.
The U.S. tariffs aren’t just a challenge; they’re a wake-up call and possibly the defining opportunity for Canada to build strategic independence.
Photo courtesy of By Eurasia Group – 2023 US-Canada Summit, CC BY 2.0, https://commons.wikimedia.org/w/index.php?curid=134359273
