There’s a lot of uncertainty in the air right now, says Ontario East Economic Development Commission (Ontario East) Executive Director Jay Amer – especially for local SMEs with U.S. customers or suppliers.
“It changes almost daily,” he explains of the business climate over the past several months. “There have been direct impacts and more are expected – we’re seeing the cost of some consumer goods go up and the tariffs are raising costs for local manufacturers too”.
This state of knife-edge uncertainty is a big reason why a new Ontario East study has put forward several recommendations – including the rollout of a diversification and supply chain resilience pilot program – to help the manufacturing-heavy region navigate a world of higher tariffs and decreased U.S. trade.
Highlights from the report were presented at the recent Ontario East Municipal Conference (OEMC) 2025 in Ottawa, and the Economic Developers Association of Canada (EDAC) national conference in Niagara-on-the Lake, Amer says the study is a framework for developing new economic strategies in eastern Ontario and other U.S. trade-dependent regions of Canada.
“We thought it was important that we do our part to help our members support employers, particularly manufacturers, facing these tariff challenges,” he explains.
High stakes in a manufacturing-heavy region
Ontario East will implement several of the study’s recommendations as part of its planned pilot program, including ramping up its work with provincial and federal partners such as Invest Ontario and Invest in Canada to attract new investment and generate funding for local employers.
Ontario East regularly works with partners such as Next Generation Manufacturing Canada (NGen), Global Affairs Canada’s Trade Commissioner Service, Invest in Canada and Invest Ontario.
The stakes are higher in the region than most: It has a 15 per cent higher concentration of jobs, with 10 per cent of eastern Ontario’s workforce employed in the manufacturing sector. Forty percent of eastern Ontario’s $65 billion in annual goods and services exports are derived from manufacturing.
That significance has a knock-on effect on the rest of the region, explains Chris King, chair of the Ontario East Regional Marketing Committee and CEO of the Quinte Economic Development Commission.
“It’s a wealth creator,” says King. “It spins off and creates opportunities across all other sectors like retail and construction and service and all those other things that are required in our community.”
Enduring a period of economic headwinds
The report identified several headwinds facing the area, which has for years enjoyed a strong value proposition as a region rich in skilled labour situated close to the U.S. east coast and major Canadian cities.
While that value proposition still largely holds, the region’s vulnerabilities are much the same as the country as a whole: A dangerous reliance on the U.S., a drop in the value of U.S. exports, and a dependence on single-node transportation chokepoints.
More than 80 per cent of Canada’s manufacturing output still flows to the U.S., according to the report.
“There’s a lot of concern,” explains King. But he also says every country is subject to the whims of U.S. trade policy – not just Canada – and that he expects Canada to get a better deal than most.
“I think there’s still a lot of hope and optimism for the manufacturing sector. Yes, we have to do things a little differently. We need to change gears a little bit. But there are still lots of opportunities.”
Amer agrees, adding that the report isn’t just meant for eastern Ontario. “It’s a framework for what other economic development groups and governments can do in Ontario and Canada,” he says.
The study contains several recommendations for eastern Ontario and similar regions across Canada, including:
- Launching an eastern Ontario market diversification accelerator for U.S.-exposed SMEs
- Embedding dual sourcing and near shoring resilience streams in existing programs to cut single supplier dependencies
- Creating an eastern Ontario micro-loan consortium to provide bridge loans for SMEs
- Establishing a rapid response logistics voucher program to offset sudden cost spikes
- Advocating for diversification grants from provincial and federal funding bodies
- Elevating the role of local economic development offices to improve awareness among local businesses on their services
Canadian and eastern Ontario SMEs can ‘compete and win’
Both King and Amer say they’re confident the region, and the country, is in a position to negotiate short-term setbacks and take advantage of the many opportunities still out there.
“It’s a big world,” King says, “and the value proposition we have is still there, recognizing we need to do more in terms of diversification.
“Manufacturers are very adaptable. They’re resilient – when the rules keep changing, that makes it tough, but our manufacturers are global leaders. And when we have an equivalent investment in automation and technology, I’d stack a Canadian manufacturer up against an American any day of the week, because we can compete and win.
“I’m pretty confident about the eastern Ontario manufacturing sector.”
The report will be made available at ontarioeast.ca.
