80% of Canadian Municipalities Surveyed Are Taking Action as U.S. Trade War Raises Costs and Delays Investment

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Tariff decisions may be made in Ottawa and Washington, but some of their earliest consequences are showing up much closer to home. Fresh evidence gathered from 31 Canadian municipalities across nine provinces found communities dealing with higher costs, disrupted supply chains and businesses reconsidering when to invest. Among the municipalities that answered a question about measures designed to cushion the disruption, four in five said they had already acted.

The responses range from changing procurement practices to contacting vulnerable employers, creating tariff-response groups and trying to attract investment from new markets. The pressure is far from uniform, however. Industrial communities tied heavily to manufacturing, forestry, resources or cross-border supply chains are reporting a markedly different experience from more diversified local economies.

What the 80% Figure Actually Measures

The headline number needs some context. The research, conducted in May 2026 by the Federation of Canadian Municipalities, the Lawrence National Centre at Ivey Business School and the City of London, received responses from 31 municipalities in nine provinces. Twenty-two were large urban municipalities with populations above 100,000, while nine were smaller, mid-sized or rural communities. Of the 25 municipalities that answered the specific question about “cushioning initiatives,” 80% said they had taken action. Among municipalities rating their overall disruption at three or higher on a five-point scale, the share taking action climbed to 94%. It reached 100% among those reporting the highest impact levels.

That distinction matters because the results are not a finding that exactly 80% of every municipality in Canada has responded. Participation was voluntary, and the researchers explicitly caution that municipalities already facing trade-related challenges may have been more inclined to participate. The findings therefore provide a snapshot of the participating communities rather than a statistically representative estimate for all Canadian municipalities. Even with that limitation, the pattern provides a useful look at how communities experiencing disruption are responding in practice.

Higher Costs Are Showing Up Before More Dramatic Economic Damage

The most common problem was not companies packing up and moving south. Among the 24 municipalities that rated six specific impact channels, 67% described increased cost pressures as severe, meaning a score of four or five on a five-point scale. Supply-chain disruption was rated severe by 46%, while 42% gave the same rating to delayed or cancelled investment. By comparison, only 17% rated hiring slowdowns or layoffs as severe, while restructuring and relocation to the United States each came in at 8%. That creates a picture of businesses initially absorbing higher costs and operational headaches rather than immediately making harder-to-reverse decisions.

Statistics Canada data collected later in the summer points in a similar direction nationally. In its third-quarter 2026 business conditions results, 32.2% of Canadian businesses expected U.S. tariffs on Canadian imports to hurt them during the next 12 months. That rose to 49.7% in manufacturing, 47.3% in transportation and warehousing, and 45.1% in wholesale trade. Meanwhile, 27.4% of businesses said they had already passed tariff-related cost increases to customers during the previous year.

Delayed Investment May Be One of the More Important Warning Signs

Investment hesitation can be less visible than a plant closure, but it can still reshape a community’s economy. Ten of the 24 municipalities assessing the six impact channels rated delayed or cancelled investment as severe. Grand Bay-Westfield, New Brunswick, offered one example. The community, with roughly 6,100 residents, reported a slowdown in housing investment and a halted industrial-park investment as part of the broader uncertainty it was observing. It gave its overall trade impact the maximum five-out-of-five rating, even though its average score across the six individual channels was lower.

The Bank of Canada has separately identified uncertainty as an obstacle to business decision-making. Governor Tiff Macklem said on September 21 that renewed trade tensions make it harder for businesses to invest and hire, which can weaken near-term growth, even while some companies are responding by changing suppliers, finding new markets and investing in technology. The municipal findings therefore capture a phenomenon that can precede more obvious damage: a factory expansion that is postponed, machinery that is not ordered or a new location that remains under review while managers wait for greater certainty.

A Small Resource Community Can Be Hit as Hard as an Industrial City

Population alone did not explain which municipalities reported the most pressure. The researchers found higher impacts among communities anchored by one or two trade-exposed industries such as automotive manufacturing, forestry, natural resources, aerospace, oil and gas. Windsor, Ontario, Mackenzie, British Columbia, and Grand Bay-Westfield all reported overall disruption ratings of five out of five, despite dramatically different populations. By contrast, the diversified economies of Markham and Saskatoon reported ratings of two, the same rating recorded by the much smaller, service-oriented Village of Myrnam, Alberta.

Windsor illustrates the industrial exposure behind those numbers. The research describes the region as sending roughly 96% of its exports to the U.S. market and having approximately one in four area workers employed in manufacturing. It cites one particularly stark firm-level example in which a tariff change reportedly raised the duty on a single industrial mould from roughly $1,500 to $61,000. Mackenzie, with a population of only about 3,288 in the dataset, is anchored by forestry, manufacturing and mining and nevertheless recorded an even higher average severity across the six impact channels than Windsor. These are participant-level cases, but they help explain why local industrial structure can matter more than city size.

Diversified Economies Have More Ways to Absorb the Shock

Economic diversification appears to provide a buffer, although not complete protection. The municipalities categorized as having concentrated industrial bases recorded an average overall trade-impact rating of 3.8 out of five. Those classified as diversified economies averaged 2.9. The researchers describe the difference as a cushioning effect: weakness in one sector may be partially offset when other industries continue expanding or remain relatively insulated from tariffs. Markham, for example, pointed to technology, life sciences and research and development as comparatively resilient areas that helped offset pressure elsewhere in its economy.

Large diversified cities can still experience disruption across many sectors simultaneously. That breadth is important because trade friction does not stop at the factory gate. Manufacturing firms buy professional services, employ local workers, lease commercial space and purchase from nearby suppliers. A slowdown can therefore gradually spread into business services and investment decisions even when a city is not dominated by one export industry. The findings do not establish that diversification makes a municipality safe from tariff pressure; instead, the participating communities with broader economies generally reported a lower aggregate impact while still identifying problems across multiple industries.

“Buy Canadian” Has Become One of the Most Visible Responses

Changing municipal purchasing has emerged as the most common response described by participating communities. Halifax reported that nearly all its direct purchasing was going to Canadian companies, while Brampton adopted a Made-in-Canada approach through its Tariff Action Plan. Mississauga, Markham, Montréal, London, Kitchener and The Blue Mountains were among other municipalities reporting procurement changes. Hamilton has also changed its purchasing policy to prioritize Canadian suppliers where possible, including a focus on Canadian steel and aluminum for municipal infrastructure and construction.

There are legal and practical limits to how far municipalities can go. Government procurement covered by the Canadian Free Trade Agreement is subject to rules designed to provide open access to suppliers across Canada, while CETA covers qualifying municipal procurements and requires non-discriminatory access for covered European suppliers. Contract value, the type of purchase, the purchasing entity and applicable exceptions all matter. That means a “Buy Canadian” response is not simply a matter of excluding every foreign bidder. Municipal procurement departments have been adjusting criteria and procedures within existing trade obligations while also considering price, supply reliability and local economic objectives.

Some Cities Are Building Local Trade-War Command Centres

Procurement is only one piece of the municipal response. Hamilton created a Mayor’s Roundtable on Trade and Tariffs that brings together manufacturers, airport and port representatives, chambers of commerce and municipal officials. The city has also used a tariff-impact questionnaire and information hub. London operates an Economic Response Team, while the research identified separate response structures in Windsor, Brampton, Markham, Gatineau and Toronto. The common idea is to create a place where information from employers can move quickly to economic-development officials as conditions change.

Those mechanisms remain active as the dispute evolves. Toronto convened a tariff roundtable on September 18, 2026 involving representatives from manufacturing, food processing, apparel, construction and technology. Participants raised rising costs, supply-chain pressure, investment uncertainty and barriers to entering new markets. Mississauga, meanwhile, said on September 16 that it was examining additional options including business tax deferrals, investment initiatives, grants, planning tools and procurement measures. Its Partners in Trade program is also focused on finding new markets and strengthening supplier connections. The examples show municipalities moving beyond symbolic purchasing campaigns toward business retention, investment and market-diversification work.

Municipal Responses Are Also Exposing Coordination Gaps

Local governments cannot control tariffs, and several participants said that limitation becomes particularly obvious when economic conditions change rapidly. Fourteen municipalities identified specific gaps in intergovernmental coordination. Recurring concerns included inconsistent channels for providing local information, delays between announcements and the operational details businesses need, and uneven ability among companies to navigate government programs. The researchers also noted that larger companies with dedicated government-relations staff may be able to respond to new programs more quickly than smaller businesses with fewer administrative resources.

The research also identified interprovincial barriers and procurement obligations as constraints on efforts to redirect purchasing toward domestic suppliers. Its authors outlined three broad areas for consideration: creating more predictable ways for municipalities to provide local economic intelligence, improving the speed and clarity of information during trade disruptions, and addressing domestic barriers that complicate adjustment. These are recommendations from the FCM-Ivey-City of London work rather than evidence that any single policy would eliminate the disruption. The broader point is that municipalities possess information about local employers and projects, while most trade and industrial-policy decisions remain responsibilities of higher orders of government.

The Trade Conflict Has Escalated Since the Municipal Data Was Collected

One of the most important timing details is that the municipal responses describe conditions in May 2026. The trade environment changed again months later. According to the federal government, the United States imposed a 50% tariff on $27.6 billion of Canadian goods effective August 22. Canada subsequently introduced matching countermeasures covering $27.6 billion of U.S. imports, with individual Canadian tariff rates of 15%, 25% or 50% taking effect September 8. Ottawa also announced $7.5 billion in new and enhanced support measures for businesses and workers, including regional assistance, financing and diversification programs.

That timing means the 80% figure should be read as an early benchmark, not a measurement of municipal conditions after the latest escalation. More recent national business data already show roughly one-third of Canadian businesses expecting negative effects from U.S. tariffs, while the Bank of Canada continues to identify trade uncertainty as a constraint on hiring and investment. What municipalities see next — construction bids becoming more expensive, employers delaying expansions, suppliers changing or projects proceeding again — will help reveal whether the pressure remains concentrated in particular industries or spreads more broadly through local economies.

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