Direct employment by manufacturers of agriculture, construction and mining equipment in Canada declined 1.9 per cent in 2025 due to trade uncertainties, weak growth in housing development and limited demand for farm equipment, according to a new report from the Association of Equipment Manufacturers (AEM).
Industry Contribution and Challenges
In 2025, the off-highway equipment manufacturing industry supported 147,000 jobs in Canada and contributed $24 billion in value added to the economy, nearly one per cent of the country's total nominal gross domestic product (GDP). Despite the decline, the sector has shown resilience compared to previous years. Direct employment fell 0.7 per cent in 2024 but grew 5.9 per cent in 2023 and remains 3.3 per cent higher than in 2022.
Megan Tanel, president of the AEM, stated: This is an industry that has held up well, but one that is still navigating a volatile operating environment. She noted that the push for critical minerals development and infrastructure investment in Canada helped offset some weaker areas.
Export Performance and Trade Agreements
Canadian construction machinery exports to the U.S. fell 2.2 per cent year over year, a relatively modest decline compared to the 35.3 per cent drop experienced by the United Kingdom and 28.6 per cent by Germany. The AEM attributed Canada's stronger performance to the integration of North American supply chains under the Canada-United States-Mexico Agreement (CUSMA). More than 85 per cent of Canadian equipment exports comply with CUSMA terms, protecting them from tariffs.
Tanel emphasized the importance of the upcoming CUSMA review scheduled for this summer, stating: In general, the high tariffs and the changing tariffs are not helping anyone. She added that CUSMA is working as a stabilizer for Canada, but stability cannot be taken for granted.
Government Support Programs
The federal government has introduced measures to offset the impact of U.S. tariffs, including a $1-billion program announced on Monday, administered by the Business Development Bank of Canada, providing financing at favourable terms to affected companies. An additional $500 million was allocated to help smaller manufacturing firms diversify their products and technology.
Last week, Statistics Canada reported that GDP grew 0.2 per cent in February, led by a manufacturing sector that expanded 1.8 per cent.
