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Ep 36: Made in Canada - Navigating Trade Turbulence

• Julia Pennella • Season 1 • Episode 36

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Tariff threats, labor shortages, and political uncertainty are creating unprecedented challenges for Canadian manufacturers. Matt Conley, Manager of International Trade and Skills Policy at Canadian Manufacturers and Exporters (CME), provides a powerful perspective on navigating these turbulent waters while building resilience in Canada's manufacturing sector.

What once seemed settled — the free trade relationship between Canada, the US, and Mexico — has been thrown into question. As Conley notes, "You should always expect the unexpected in politics." Despite these challenges, he emphasizes that the USMCA agreement has generated billions in prosperity across all three countries, creating countless jobs and making products more affordable for consumers. The solution isn't walking away from the negotiating table but continuing crucial discussions that benefit manufacturing sectors across North America.

For small and medium-sized Canadian manufacturers, specific supports are essential for global competitiveness. CME's blueprint "Securing Canada's Economic Future" outlines 17 proposals to strengthen the sector, from reducing redundant paperwork to improving tax competitiveness through investment incentives for new equipment and technology. With an aging workforce approaching retirement, addressing labor shortages requires both domestic training initiatives and streamlined immigration processes. Currently, disconnects between labor market assessments and immigration components create unnecessary administrative burdens that disproportionately impact smaller manufacturers.

See the blueprint here: https://cme-mec.ca/initiatives/blueprint-to-strengthen-canadian-manufacturing/ 

Perhaps most critically, Matt suggests that Canadian productivity lags due to internal trade barriers between provinces. Different truck weight regulations and duplicative permitting requirements force manufacturers to navigate multiple regulatory environments within their own country – so much so that some businesses have historically routed products through the US to avoid these interprovincial obstacles. With new tariffs making this workaround unfeasible, addressing these internal barriers has become even more urgent.

Conley's message to the federal government is clear: "You have a fantastic manufacturing sector in Canada with some of the smartest, most capable people willing to work hard and find solutions. Just give them the tools they need." By reducing red tape, eliminating internal trade barriers, and accelerating infrastructure projects, Canada can unleash world-class products across global markets. 

Quick Heads up: this episode was recorded on June 6, 2025, so while the news may have changed since this conversation was recorded that thought and ideas still remain relevant. 

Subscribe to hear more conversations on how policy decisions impact Canadian industry and what's being done to create economic resilience in uncertain times.


Julia Pennella:

Welcome back to let's Talk Politics, the podcast where we break down the political and economic forces shaping our world and what they really mean for you. Today's episode is part two of my conversation with Matt Conley, manager of International Trade and Skills Policy at Canadian Manufacturers and Exporters. If you caught part one of our episode, you know we got into some big picture issues around trade and the manufacturing sector. But in this episode we're going even deeper. Matt and I talk about the future of Canada's manufacturing sector, especially with the USMCA up for renewal in 2026. What could that agreement look like? What's at stake for Canadian businesses? All really big questions we're diving into. We also dig into CME's policy roadmap, securing Canada's Economic Future, which lays out 17 proposals, from cutting red tape to boosting tax incentives for investment in new equipment and technology. Plus we tackle a topic that doesn't get enough airtime to boosting tax incentives for investment in new equipment and technology. Plus, we tackle a topic that doesn't get enough airtime interprovincial trade barriers. In Canada, different rules across provinces and territories are making it harder, not easier, for Canadian manufacturers to compete. Matt explains why federal and provincial and territorial governments need to work together if we're serious about a strong, resilient industrial base. Quick heads up.

Julia Pennella:

This episode was recorded on June 6, 2025, so, while the news may have changed since this conversation was recorded, the thoughts and ideas still remain relevant. Since this conversation was recorded, the thoughts and ideas still remain relevant. But before we jump into that conversation, let's quickly check in on what's making headlines this week in the news. Over in Alberta, g7 leaders have provisionally agreed on a global action plan to develop critical mineral supplies, a move aimed at reducing dependency on China for essential resources like lithium, cobalt and rare earth minerals. Critical mineral supplies a move aimed at reducing dependency on China for essential resources like lithium, cobalt and rare earth minerals. It's a big deal, especially for industries like EVs, smartphones and defense. While the agreement hasn't been formally signed yet, all G7 leaders seem to agree securing these supplies is a priority.

Julia Pennella:

Meanwhile, domestically, we're seeing real concerns about the health of Canada's manufacturing sector. New numbers from Statistics Canada show manufacturing and wholesale sales dropped more than expected in April. Some economists are even warning this could be an early sign of a recession, with rising input costs, falling demand and Trump-era tariffs still weighing on trade. The sector is clearly under pressure and south of the border, american retail sales dipped in May, particularly in auto sales, likely due to early surges to beat potential price hikes. While solid wage growth is helping keep consumer spending afloat, signs of softening demand are starting to show in America, just as the US Federal Reserve meets to weigh its next move on interest rates. All right, that's the news recap.

Julia Pennella:

Now let's get into the conversation with Matt Conley and unpack what's happening for Canadian fend facturing. Let's talk politics. As we're talking about the North American economy, I'm going to bring it back to the USMCA, formerly known as NAFTA. So I'm curious from your perspective. We know that agreement was intended to stabilize trade relations and again foster this free trade agreement between Canada, us and Mexico. So I want to ask you are these new tariff threats a signal or a sign that that agreement maybe lacks sufficient enforcement power? Or do you think it's just the political climate simply overriding trade law?

Matt Conley :

You know, that's an excellent question, and it takes me back actually to about a few years ago, because I was at an event put on by the Public Policy Forum and it was celebrating over 30 years of the original Canada-US free trade agreement. That was the precursor to NAFTA, and at this event there was a lot of university professors there, there was executives from model companies, from steel and aluminum companies, and you just had speech after speech of people that talked about how an entire generation would know nothing but free trade with the Americans, and they talked about how contentious of an issue it was in the 1980s and how it shifted an entire election, but basically they celebrated the fact that, you know, this is a done deal. We have this free trade agreement and there didn't be an entire generation that would continue to grow and would never know anything else. But and this is a solved question and here we are three years later. So it just goes to show that in politics, you should always expect the unexpected, and even certain assumptions that underpin how political structures work can always be changed. And so, you know, here we are, we're questioning and having a lot of these discussions, and so to me, I took that as an important lesson.

Matt Conley :

That being said, I do think that there is some political motivation behind what we're seeing. It's been a challenge to be able to work with the current administration to try to get down to what Canada can do, but to me that's why we can't get up from the table. We have to keep negotiating, we have to keep having the discussions because it's too important. Like NAFTA and then later under USMCA, it's generated billions of dollars in prosperity for all countries, and it's created the ability for products to become cheaper and to be affordable for people on all sides of the border, and it's created countless jobs, and so CME will always continue to make sure that we're looking for a responsible agreement that works for all countries. I mean, it's not a perfect agreement. There's always other challenges to work through.

Julia Pennella:

But it certainly can't be understated how important this is and how CME is going to be part of the conversation as we move forward. And you know what's also, I think, coming to mind is just you made that point how fast things have been moving. I launched the podcast back in February and the conversations I was having then, just only a few months ago, are completely different like complete 180 to where we are today and again where we thought the election was going to head. All these things. It's just so ever-encompassing of how politically wild the times we're in right now.

Julia Pennella:

You know we haven't even mentioned, but when we're talking about job loss, before I hopped on I was watching a video how they're saying AI is going to wipe out in the next five years, I think, 20% of white collar jobs. So you have this whole thing happening in the background, you have all this political chaos going on, so it's just a huge tornado of things happening. So, again, really appreciate the insight in the conversation here, matt, and I want to ask you and bring it back a little bit more domestically, canada's manufacturing ecosystem includes many small and mid-sized exporters. What specific supports whether it's financial, logistic or diplomatic do they need to scale to compete globally. So we talked a little bit about some maybe regulation barriers. But, yeah, is there anything that you think can help move that needle further?

Matt Conley :

Absolutely, and that's a really good question. So in the last election, cne tabled a document called Securing Canada's Economic Future, and it's a blueprint to strengthen Canada's manufacturing sector. And so this outlines 17 different proposals to the federal government to say, look, this is what would really help small and medium-sized manufacturers. And it was all-encompassing. It included everything from reducing red tape and removing duplication. It can often be especially onerous for small and medium-sized businesses to fill out paperwork, and often fill out the same paperwork for the same result.

Matt Conley :

We called on the government to improve tax competitiveness. So if they could incentivize investing in equipment, in new technology and new machinery and software, that would go a long way to making those investments just a little closer and increasing capacity. We called for additional investments in grants and scientific research and R&D. So very much looking to that Labor as well is going to be a big thing. Manufacturing in particular has a labor force that's approaching retirement and so there's a lot of jobs that need to get refilled by new job seekers and underrepresented groups that haven't traditionally looked at manufacturing. We want everyone and everyone can conceive themselves and have a career in manufacturing. Certainly, we're looking for additional resources to help with environmental footprints.

Matt Conley :

It's really important to achieve certain net zero targets, and small and medium manufacturers often need a few more resources and some help from the government in navigating and making sure that they're doing and investing in the right things that they need to.

Matt Conley :

Certainly, issues around trade, around CARM and I've been working with CBSA on just even trade issues and moving goods across borders, and so this is all covered in that platform and this is what we're going to be presenting forward to the federal government to say if you want to have an impact on small and medium manufacturers tomorrow, these are the types of things that we want to see and that we'll be looking for.

Matt Conley :

Certainly, for manufacturing, it's not going to be any one thing. It's going to take all of these little things working together to really recharge and unleash the potential of the sector. And, as I mentioned, manufacturers are innovative. There's a lot of ingenuity and there's a lot of stuff that they can do and they're willing to find those ways, but they just need that help from the government and, especially in an uncertain time, the more certainty as possible that the Canadian government can introduce is going to be key. People can count on that. They know they're going to get their permits. Their workers will arrive on time. Those are all key factors to be able to navigate just the uncertainty that we're seeing from the US and across the world.

Julia Pennella:

Well said and I'll be sure to include that report in the show notes for anyone that wants to read it a little bit more in depth. And I want to lean into that point because you brought it up In Canada we're facing a skill shortage. We have both retirement aging population who are really the crafts and tradesmen at the core of a lot of the manufacturing industry. We know the shortage has been a longstanding issue, at least for the last 10 years. What should governments and industry be doing differently to attract and retain that talent, especially in high tech and skills trades roles? Because we did talk about it, we're seeing an evolution and movement towards innovation, towards AI and automation. So yeah, I'm curious what can that core recommendation be to attract and retain that talent?

Matt Conley :

For sure, and it's a good question on a couple of fronts, because one of the things that CME and its members always have to balance is the potential of hiring new people and new workers versus investing in things like AI, and at CME we see that they go hand in hand. Essentially, you need the best tools and the best equipment to be able to increase your capacity, but also you need the labor force to be able to support and do those jobs and make the products, the labor force to be able to support and do those jobs and make the products, and so. But it's a balance and you know we represent everything from consumer products to steel and aluminum, to automobiles, and so it's. It's a challenge because everyone kind of has their own mix and what they need, but certainly we encourage our members to research and find the right solution that works for them. On the labor side, it's going to take a multi-pronged approach because certainly we always encourage our members to hire domestically and to make sure that they're skilling and retooling and working with the people that are in their local communities, and we feel that there's a part for all levels of government to play, whether it's the province and education and providing the right skills training, but also the federal government, and incentivizing people to get the skills that they need to work in the sector, and so it's going to take work from all sides to make sure that it comes together. However, immigration is incredibly important as well. I mean, if you look at any TD or RBC report on immigration, there's still a productivity gap in Canada, and immigration is going to be a key role, and so I'm really looking forward to seeing what the federal government comes out as far as helping with the permanent residency programs and providing those pathways for permanent residency, but also what the future of the temperate foreign worker program looks like.

Matt Conley :

There's a lot of jobs that are in manufacturing, that are seasonal in nature and places that rely on that program, and what we're calling for on the government there is can you just streamline it and make it a bit more simple and just take away some of the administrative burden, because a lot of people don't realize that there are two components when you apply through the TFW program, you have the labor component, which is run by ESDC, where you get the labor market impact assessment, and then there's the immigration component, where they focus on the individual that's coming through, and quite often those processes don't talk to each other and it can be especially difficult for small and medium-sized manufacturers that oftentimes there's one or two people that are managing the paperwork and trying to navigate the systems.

Matt Conley :

And it's difficult when they don't realize this is a labor component and this is an immigration component and it can have some really bad outcomes where product doesn't get to or capacity isn't reached because they just didn't have the workers.

Matt Conley :

And I was talking with our HR council in Newfoundland and they know all about immigration there and it's a super critical component. And when you talk about retention as well, I like to call on those members especially too, because they talked about all of the little things that they do at the employer level to try to help them find where they can get their driver's licenses or where the kids can go to school or have different programs, and so a lot of those employers are really investing in their workers and they care because they want to see the workers succeed and see their families grow Like. In a lot of cases, manufacturing is a family business in the sense that people spend a lot of time together. These are tough jobs that people work together on, and so there's certainly a willingness from the employer side. It's just making sure the government gives the tools to the manufacturers to be able to grow and get the workers that they need and retain them.

Julia Pennella:

Yeah, very well said and to that point too. Like manufacturing is a family business, you have the assembly lines, but it also most of them started off as family businesses. I can also speak to that. My dad's a manufacturer. He manufactures bike racks and is one of the leading producers in Canada. But it starts off with a small idea and then it obviously grows.

Julia Pennella:

And I also want to point to as well, like I worked on the labor file and the seniors file and it was so interesting to me when we're looking at this aging population leaving the trades, interesting to me when we're looking at this aging population leaving the trades. It's so important to have those conversations of these older people, whether it is the trades or even we can take nursing, for example. These people have institutional knowledge that is so critical and they necessarily don't want to retire and just twiddle their thumbs at home. Let's make to your point let's grow our domestic workforce, use these older people in these sectors to train the new people coming in. Like I think it's such an easy tool for that retention, for that attraction to learn from the hands that helped carve and build these industries right.

Julia Pennella:

Like it feels like a no-brainer and I really hope that government looks that more and and to your point as well, I worked in government both on the constituency side and in Parliament Hill and a minister's office and the silos between departments is also just like a whole other can of worms. I don't even think we have enough time to get into it. But yeah, like there's so many I think solutions and it's great that your organization is pushing them forward, having these conversations. So again, kudos to that and I want to throw it to you. Do you want to add in anything?

Matt Conley :

Absolutely, and I agree with you as well. And you know manufacturing is also personal to me as well. So growing up my dad worked in manufacturing his entire career. So he started with ConEar, which got bought out by Alcoa and then later got spun off, but they specialized in making aluminum doors and windows. And for the time that I could walk I remember doing like little site visits with my dad and I could explain to you the whole process of how they bring in the aluminum log and they extrude it and they make the product and you could get it in every shade of brown that you could ever want. Or they had a paint shop for extra little fee they could paint whatever color you wanted. And I remember like visiting the facility with my dad and seeing how they made doors and windows. And then later in his career he worked for the Lucerne plant, lepridge, where they brought in peas and corn off the fields to freeze them into bags, and so they did Green Giant and no Name and all the different brands.

Matt Conley :

And food in particular is an interesting one, because I find that people forget about the manufacturing role that's played. Is that, you know, oftentimes we, and rightfully so there's a lot of subsidies and a lot of things that are available to the farmers, but after the food is grown, it still has to get processed, and not everything goes to fresh produce. It's still important to get vegetables into bags, to put tomatoes in cans, to make tomato sauce, and so that's all manufacturing, and so that's a critical component to our food and supply chain there. But no, I completely agree. Like whenever I need someone to sound off, I talk to my dad and get his perspective, and he's retired now. But you're right, there is a lot that a lot of those older manufacturers can provide as far as advice on how the sector works, and so I'm with you we have to get creative and we got to find new solutions, and I'm optimistic, for sure.

Julia Pennella:

And I love how you have a bit of a full circle, matt, like you saw that behind the scenes, and now you're working for the association that is promoting manufacturers and exporters, so that's so cool. And I also want to say I kept coming up. A lot to mine is we're talking like family businesses and you kept saying cans and tomatoes like Unico, aurora. These are just like. These were small Italian families who started off with just doing things, probably like in their garage, and then mass scaled them up and they're like household staples, right. So I know like, again, the Italian community has a huge connection to the manufacturing sector. So all really good points. And I also want to ask you we talked a little bit about innovation, ai but, looking ahead, what does a resilient and competitive future for Canadian manufacturing look like to you and what needs to happen now, politically or economically, to get us there?

Matt Conley :

Yeah, that's the million-dollar question right now and to me, the biggest thing the government can do right now is provide certainty to the manufacturing sector. Like I said, we're in a world right now where things are uncertain. They're not sure where their next order is going to come from. We're still working through what with the United States and the challenges that we're seeing from the terror situation. What the government needs to do is provide that certainty, make sure that if processes and times are happening in immigration stick to those times. Make sure they're, as reported, permitting, especially on the big projects, like we were encouraged to see Prime Minister Carney talking about, the approvals for big projects coming down to two years.

Matt Conley :

There's certainly a lot of challenges in how to make that happen, but manufacturers need to rely on that and that's going to have a big impact on making sure that we boost the economy and that we have jobs that are available for manufacturers. But in an unstable world, really the one thing that they can do is provide certainty and that's what we're going to be calling for is be as transparent as you can. We recognize no government has limitations and government can only do so much, but basically it's working together with the private sector to make sure that the right policies and tools are in place so that way the private sector can thrive and can grow, and so that's what we're really looking for there. But it's going to take a team effort, and certainly a team Canada effort from the premiers and from the federal government. But we're encouraged. It looks like we have the right team in place that can deliver.

Julia Pennella:

Yeah, very well said and as we're just wrapping up here, very well said and as we're just wrapping up here, I'm curious too because this has been comments from economists, also from other business leaders that one of the biggest issues in Canada, the Bank of Canada, also shared it actually that Canada lags in competition and productivity. What do you think is the barrier that's causing this lagging productivity and competition?

Matt Conley :

I think it's not any one factor. I think it comes down to, first of all, the internal trade barriers. It's just so difficult to be able to move certain goods from one side of the country to the other. I've heard from many different members that what they've done up until recently is they would ship down to the US and then ship back up into the province that was going to be the destination, and now, with the tariffs, that's unaffordable.

Matt Conley :

But even as far as moving goods in Canada, there's different truck weights that apply for roads in different provinces, and so that's been one of the barriers of when you have to take product off, putting in a different truck to get it across the province, and that can be really cumbersome as well. So it's streamlining into like anything at the interprovincial side, same with permits for workers working in different provinces. If that could be streamlined as well. Oftentimes it's the same standard that that the people follow. You need the permission from each province, and so we can streamline that. That would go a long way. But really it's everyone working together to make sure that our internal systems work. If there's one thing that we can achieve from this uncertain and difficult time as a silver lining, it would be that is improving that relationship between the provinces, also just reducing any red tape and redundancies.

Matt Conley :

I mean, a lot of our members complain about just a lot of the paperwork and having to go through different things, and you always see examples of where government is taking that on.

Matt Conley :

So, for example, when the counter tariffs came out, there was about three different lists that manufacturers had to check, and so oftentimes there was some confusion. Not every manufacturer took the right list, and so there were some challenges there. Finance Canada created a fantastic tool where, basically, it has all the counter-terrorist lists in one place. You can search by your code and that's all right there. And so even small little things like that of just simplifying, making sure that manufacturers have the right information, things like that are all critical, but the big thing we're looking for is the shovels in the ground on the big projects. I'm super encouraged to see the premiers coming forward with their ready-made projects of what they need as far as energy infrastructure and transportation infrastructure. Those have to happen, and so we're going to be looking closely for those and pushing as hard as we can, because that's really going to be one of the driving forces that helps the manufacturing sector.

Julia Pennella:

Well said. I really appreciate that. So I really hope that this is a wake-up call to kind of the summary of our conversation build that Team Canada approach and Team Canada economic goal. So my last question here is if you could sit down with the Prime Minister and maybe a few key premiers tomorrow, what's the one urgent action you'd push for to strengthen Canada's manufacturing sector in the face of all this global trade uncertainty?

Matt Conley :

Well, what I would say is, Prime Minister, you have a fantastic manufacturing sector in Canada. You have some of the smartest, some of the most capable people that are willing to work hard, find solutions. You just have to give them the tools that they need, and so that's reducing red tape, reducing those internal trade barriers and making sure that there's shovels in the ground. If you can do those three things, you will unleash incredible capabilities and get world-class products across the entire world to show what the best that Canada has to offer. Whether it's in consumer products, whether it's beer, whether it's steel products. We make some fantastic and amazing products that should be celebrated across the world, and so manufacturing is ready to go. Just make it happen and unleash the sector.

Julia Pennella:

Love it. What a great way to end it. So that was Matt Conley. He's the manager of international trade and skills policy at the Canadian manufacturers and exporters. Matt, I just want to throw it to you. Are there any other closing thoughts you want to share with the listeners?

Matt Conley :

Absolutely.

Matt Conley :

I just want to give a little bit of a plug for CME as an organization.

Matt Conley :

So I joined back in February and actually my first day was tariff day from Donald Trump, so it's been a roller coaster ever since, but I've had a fantastic time working with our national team.

Matt Conley :

So a lot of people don't realize, actually, that CME operates across the country. So we do advocacy in all provinces and we have vice presidents in all the different regions of Canada, but we also offer a whole training business and so, basically, if you're a small or medium sized manufacturer and you want lean training to be able to improve efficiency, we offer that as well, and so we travel across the country and provide training and some really good tools and things that manufacturers can use to improve their processes, and so it's been fantastic working with this organization and certainly, if any of your listeners want to talk more, we're always here and available. But it's been an interesting time and I think it'll keep being interesting as we go forward. But you know some of the some important messages to take forward to government and we're here in Ottawa working hard and across the country to be the voice of manufacturing.

Julia Pennella:

No, that's great to hear and it sounds like you're doing great work, and I'll be sure to include those in the show notes for anybody that wants to reach out to Matt or CME for more information. But, matt, this was a really great, insightful conversation. I just want to thank you so much for your time and for all the great data and pulse check of what's happening. So thank you again for that. And so that was Matt Conley on let's Talk Politics. Please be sure to tune in next week for my next special guest and we'll catch you there.

Matt Conley :

Thank you, julia, you're the best Appreciate it.