CME: Budget 2025 Delivers Key Gains for Manufacturers Facing Tariff Pressures, but Canada Still Needs Deeper Competitiveness Reforms

November 10, 2025

Canadian Manufacturers & Exporters (CME) applauds Budget 2025 for recognizing the serious challenges facing Canada’s economy amid ongoing U.S. trade actions and for introducing new incentives to spur investment.

“This budget takes meaningful steps to support manufacturers under pressure and acknowledges the critical role our sector plays in Canada’s economic future,” said Dennis Darby, President and CEO of CME. “Immediate expensing for manufacturing equipment and buildings, SR&ED enhancements, and new trade infrastructure investments will help manufacturers compete, but deeper tax and regulatory reforms are still needed to ensure the sector can not only survive but thrive amid U.S. trade pressures. Building long-term industrial resilience in a volatile global trade environment must remain the ultimate goal.”

Specifically, CME welcomes the reinstatement of immediate expensing for manufacturing machinery and equipment, as well as the introduction of immediate expensing for manufacturing and processing buildings. These measures are critical to restoring Canada’s tax competitiveness with the United States, especially in light of policy changes introduced under the One Big Beautiful Bill Act. However, it is disappointing that these provisions will only remain fully in place until 2030, with a gradual phase-out through 2033, rather than being made permanent as CME has urged.

CME is also encouraged that the government is advancing long-awaited enhancements to the Scientific Research and Experimental Development (SR&ED) program, including streamlined administration to reduce red tape for innovators. That said, the absence of any mention of a patent box remains a missed opportunity to strengthen Canada’s innovation ecosystem and retain intellectual property at home.

CME further welcomes the government’s decision to repeal the luxury tax on aircraft and vessels, effective immediately after Budget Day. This is a positive move for sectors that have faced unintended harm from this policy.

The government also unveiled its new climate competitiveness strategy. While short on specifics, the strategy signals a shift in climate policy that aligns with several changes long advocated by CME, including: the potential removal of the damaging oil and gas emissions cap; unwinding the misguided greenwashing amendments to the Competition Act; and changes to the electric vehicle mandate which has been detrimental to Canada’s automotive industry.

Despite these constructive steps, CME had hoped the government would use this budget as an opportunity to launch a comprehensive review of Canada’s outdated tax system–an essential step towards deeper competitiveness reforms. While the budget references limited regulatory modernization efforts, including plans to streamline low-risk processes, update obsolete requirements, and reduce reporting burdens, these measures remain far too narrow in scope. To truly restore Canada’s competitiveness, CME continues to urge the government to pursue broad-based tax and regulatory reform that lowers costs, attracts investment, and supports long-term industrial growth.

CME remains supportive of previously announced initiatives to help sectors most affected by U.S. tariffs and trade disruptions. This includes the creation of the new Defence Investment Agency and the introduction of a Buy Canadian Policy, both of which, if implemented effectively, can strengthen domestic supply chains and create new opportunities for Canadian manufacturers. Budget 2025 builds on these efforts with nearly $82 billion in new defence spending over five years to meet NATO commitments and $5 billion over seven years for the Trade Diversification Corridors Fund to improve trade infrastructure. CME will be working closely with the federal government to ensure these initiatives deliver practical results for industry and help reinforce Canada’s long-term industrial resilience.

“Manufacturing sits on the front lines of the tariff war, and in the absence of a new trade agreement with the United States, the pressures on our sector demand decisive, coordinated action,” said Darby. “Manufacturers can’t afford delays, and CME will work closely with the federal government to ensure a swift and effective rollout of new and previously announced measures. Timely implementation is essential to protect jobs, attract investment, strengthen Canada’s industrial base, and secure our long-term economic future.”

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