Statistics Canada said Friday that manufacturing sales fell 2.8% in April, the largest monthly drop since October 2023, as the tariff dispute with the United States hit the industry.
Manufacturing sales stood at $69.6 billion in April, their lowest level since January 2022, after a third straight monthly decrease.
Drops in sales of petroleum and coal products (down 10.9%), motor vehicles (down 8.3%) and primary metals (down 4.4%) drove the decline.
Growing global trade tensions in April were a major factor driving down prices and volumes in the petroleum and coal products industry, StatCan said.
While the trade war kicked off in March, April marked the first full month of tariffs from the United States in many sectors — particularly targeting Canada’s steel, aluminum and automotive industries.
The U.S. administration has since offered some carveouts from the tariffs for CUSMA-compliant goods, and Canada has also provided relief on its own counter-tariffs for businesses in some critical manufacturing sectors.
Eight provinces saw manufacturing sales drop in April, but StatCan said Ontario experienced the biggest tariff-related decline. Several auto assembly plants in the province partially shut down operations amid tariff uncertainty during the month.
Roughly half of manufacturers surveyed by StatCan said they were affected by tariffs in some form in April, as did 43% of wholesalers.
A separate release from StatCan said wholesale sales fell 2.3% in April, with the motor vehicles, parts and accessories subsector leading the drop.
The agency’s surveys of manufacturers and wholesalers found that price increases, changes in product demand and higher costs for raw materials, shipping and labour were the most common impacts from tariffs.
StatCan reported last week that Canada posted its largest merchandise trade deficit on record in April, at $7.1 billion, as exports fell sharply in the face of tariffs.
CIBC senior economist Andrew Grantham said in a note to clients Friday that both manufacturing and wholesale sales were weaker than expected for April.
That suggests StatCan’s flash estimate calling for a 0.1% rise in real gross domestic product for the month could be an overshoot — the economy may have started the second quarter with flat or slightly negative growth, he said.
Signs of lower inventories in the manufacturing data also bode poorly for April’s GDP figures, Grantham said.
StatCan will issue its formal real GDP estimates for April on June 27.