Canada's supply chain shift: Businesses reshore production amid US trade war

The escalating trade war between Canada and the U.S. is prompting some small and medium-sized businesses to bring production back home, seeking greater control over their supply chains and costs.

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I love my manufacturer in Vermont. He was perfect, but we could not afford having an American flag on one of my products

Anie Rouleau, founder and CEO of Montreal-based The Unscented Company, moved soap production from Vermont back to Canada, citing the prohibitive cost of U.S. tariffs. She estimates these tariffs will cost her company $150,000 by the end of 2026. While the company already produces 80% of its stock in Canada, Rouleau is now committed to more local sourcing for ingredients, even if it means postponing profitability.

"When you make that decision to produce here in Canada, you’re obviously making it more expensive for a while until you build your volume," Rouleau told Global News. "But I’m willing to postpone profitability to make sure we produce here and to create a solid and sustainable economy."

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It is significant enough to have a plan. So now we actually are executing our plan

Chapman's Ice Cream is also shifting its strategy, aiming to convert over 70% of its ingredients from the U.S. back to Canada or other countries. Last year, the company absorbed initial tariff costs, and COO Ashley Chapman announced that prices would not increase until March 2028. The company has also partnered with other Canadian firms to reshore production of items previously manufactured elsewhere.

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When you make that decision to produce here in Canada, you’re obviously making it more expensive for a while until you build your volume. But I’m willing to postpone profitability to make sure we produce here and to create a solid and sustainable economy.

Saibal Ray, chair of supply chain management at McGill University, acknowledges the benefits of reshoring but highlights the complexities. "Because of NAFTA and CUSMA, supply chains were so integrated across the three countries, we have not developed competency in certain things because that was not needed," he explained. "The competency was somewhere else." He added that for small and medium-sized enterprises, handling all aspects of production at scale is "absolutely impossible."

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Not only have we managed to keep our component costs the same, but we have also partnered with other Canadian companies to reshore production of some items that have never been produced in Canada before.