ctivity and limit how fast companies can grow without adding headcount.
Trade policy is also changing where the next incremental factory line gets built. KPMG says most firms still expect to keep their headquarters in Canada (80%), but uncertainty around tariffs and supply chains is pushing some to place future investment in the US. KPMG also notes that 11% expect to relocate headquarters within five years, a small share that could still sting given manufacturing makes up more than 10% of Canada’s economy.
Why should I care?
For markets: 57% delaying capital spending can show up later in earnings and the loonie.
When companies pull back on capital spending and research, the hit tends to arrive with a delay: fewer productivity gains, slower capacity growth, and a weaker pipeline of higher-margin products. If production shifts south as well, more future revenue, hiring, and supplier spending accrue in the US instead of Canada. Together, that can chip away at medium-term expectations for Canadian industrial firms and keep pressure on Canada-linked pricing, including the Canadian dollar and longer-dated Government of Canada bonds as investors compare Canada’s growth outlook with the US.