Trump’s 50% Tariff Threat Pushes Canadian Cabinet Maker to Consider Moving Production to U.S. After Major Job Cuts

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A Canadian manufacturing success story is facing a difficult crossroads as President Donald Trump’s trade policies force businesses to reconsider where they can afford to operate.

Cabico, one of Canada’s major kitchen cabinet manufacturers, is exploring the possibility of producing some of its products in the United States after suffering declining exports and significant layoffs. The Quebec-based company, which also operates in Ontario, has spent decades building its business around American customers.

Now, with U.S. tariffs on covered kitchen cabinets and vanities scheduled to increase from 25% to 50% on January 1, 2027, the company’s future is becoming increasingly uncertain.

The situation highlights a growing concern for Canadian manufacturers: protecting domestic jobs may become harder as businesses look south of the border to preserve their customers and remain competitive.

A Canadian Cabinet Manufacturer Faces a Difficult Decision

For nearly four decades, Alain Ouzilleau has helped build Cabico into one of Canada’s prominent custom cabinet manufacturers. Founded in 1986, the business operates manufacturing facilities in Coaticook, Quebec, and St. Catharines, Ontario, where its Elmwood brand produces high-end cabinetry. Its products reach homeowners through an extensive network of North American dealers. That cross-border business model helped the company expand, but it has also left Cabico particularly vulnerable to changes in American trade policy.

Ouzilleau told Reuters that the company is reluctantly exploring partnerships that would allow certain products to be manufactured in the United States. The possibility represents a significant departure from its established Canadian production model. Importantly, Cabico has not announced a complete relocation or the closure of its Canadian plants. However, even considering American production illustrates how dramatically the economic environment has changed. For employees who have built careers around the company’s Canadian operations, the uncertainty raises questions about future employment and investment.

Why Trump’s 50% Tariff Threat Is So Significant

The United States currently applies a 25% tariff to covered imported kitchen cabinets, bathroom vanities and specified components under Section 232 of the Trade Expansion Act. The Trump administration introduced the measure in 2025, citing national security and the need to strengthen American manufacturing. Although the tariff was originally scheduled to increase to 50% in January 2026, the White House postponed the increase for one year. Under the current proclamation, the higher rate is scheduled to take effect on January 1, 2027, unless another policy change or qualifying trade agreement provides relief.

The financial implications are substantial. For example, a shipment with a customs value of US$10,000 would face a US$2,500 tariff at 25%, compared with US$5,000 at 50%, before any other applicable charges. Businesses must decide whether to absorb these costs, negotiate lower prices with suppliers and customers, or pass them along to American buyers. Each option creates financial pressure, especially for manufacturers competing against U.S.-based producers that do not face the same import duty on their finished products.

Cabico’s Declining U.S. Sales Have Already Cost Hundreds of Jobs

Cabico’s dependence on American customers has become one of its greatest vulnerabilities. Before Trump’s latest trade measures, approximately 90% of the company’s products were shipped to the United States. According to Reuters, Cabico’s U.S. shipment volumes subsequently declined by 25% compared with 2024 levels. The company also laid off more than a quarter of its approximately 700 employees. Separate reporting by Quebec newspaper Le Journal de Québec in September placed its workforce at roughly 450, representing a reduction of approximately 250 positions from its earlier staffing level.

Those losses carry consequences beyond reduced payroll expenses. Cabinet manufacturing requires experienced workers who understand woodworking machinery, finishing techniques, custom measurements and production quality. Many of these abilities take years to develop. When factories reduce shifts or eliminate positions, communities lose more than immediate employment income; they also risk losing specialized manufacturing expertise. The layoffs underscore how decisions made in Washington can affect households in Coaticook and St. Catharines, even when the facilities themselves remain operational.

Millions Invested in Canadian Factories Now Face an Uncertain Return

Cabico’s difficulties are particularly striking because the company had been investing heavily in its Canadian operations. Reuters reports that Cabico spent approximately C$30 million over five years expanding production capacity and introducing automation at its Quebec and Ontario facilities. The investments were designed to improve efficiency and strengthen its ability to serve American customers. In Coaticook, upgrades have included advanced machinery, robotics and integrated production systems that allow craftspeople to manufacture customized cabinetry with greater precision.

Those improvements were intended to support growth rather than prepare the company for a shrinking export market. Modern equipment can reduce production expenses and improve quality, but even highly automated factories cannot eliminate tariffs imposed when their products cross an international border. The result is a difficult financial situation in which expensive infrastructure remains in Canada while future sales opportunities become less predictable. If Cabico eventually establishes American production partnerships, it could face the additional expense of developing capacity outside Canada while maintaining existing facilities and obligations at home.

Cheaper Imports Make It Difficult to Replace Lost American Customers

Redirecting sales toward Canadian homeowners might seem like an obvious response to U.S. tariffs. However, manufacturers say the domestic market presents challenges of its own. Luke Elias, president of the Canadian Kitchen Cabinet Association and Ontario’s Muskoka Cabinet Company, told Reuters that cheaper imported products have placed significant pressure on Canadian producers. He estimates that domestic manufacturers are operating at just over half the production capacity they maintained three years earlier, making it difficult to compensate for declining American orders.

The scale of Canada’s export dependence helps explain the problem. According to the industry association, Canadian cabinet manufacturers exported approximately C$610 million worth of products to the United States in 2024. Meanwhile, increased competition from imported cabinetry and a slower Canadian housing market have limited opportunities for expansion at home. Manufacturers must compete against lower-priced alternatives while supporting Canadian wages, facilities and other production expenses. For companies specializing in premium custom cabinetry, reducing prices enough to capture a larger domestic market may further squeeze already strained profit margins.

Other Canadian Cabinet Makers Are Cutting Staff and Operating Hours

Cabico is far from the only Canadian manufacturer struggling with the changing trade environment. Ontario-based Muskoka Cabinet Company has reduced its workforce by approximately 40% from an earlier 70 employees, according to its president, Luke Elias. The business has also reduced operations to three days a week and suspended new investment to conserve money. For a smaller manufacturer, these decisions can mean fewer paycheques, delayed equipment purchases and less certainty about future orders. Elias has warned that additional tariffs could force more Canadian cabinet manufacturers to close.

In Manitoba, Decor Cabinet Company has taken a different approach. Its chief financial officer, Dave Schellenberg, told Reuters that the manufacturer has absorbed part of the tariff burden to maintain relationships with American customers, significantly reducing its profit margins. Decor has also used the federal Work-Sharing program, which allows eligible employees to work fewer hours while receiving Employment Insurance support. The goal is to preserve skilled jobs until business conditions improve, rather than losing experienced workers permanently.

Ottawa’s 25% Import Surtax Offers Protection, but Manufacturers Want More

The Canadian government has introduced its own trade measures in response to pressure on domestic cabinet producers. On July 31, 2026, Ottawa implemented a provisional 25% surtax on certain imported wood cabinets, vanities and related components for up to 200 days. The measure is intended to protect Canadian manufacturers from harmful import surges while an investigation continues. However, it includes exceptions for qualifying products originating in countries such as the United States, Mexico, Chile and Israel, as well as designated developing countries.

The Canadian International Trade Tribunal is examining whether increased imports have caused, or threaten to cause, serious injury to domestic producers. Its report is due January 15, 2027. Some manufacturers argue that the temporary surtax has not been strong enough to slow foreign competition and are advocating duties of at least 100%. Those higher duties remain an industry demand, not an adopted government policy. Moreover, Canada’s import surtax cannot eliminate the separate American tariffs affecting Canadian exports, leaving manufacturers vulnerable to pressure in both markets.

Canadian Manufacturers Are Increasingly Considering Moving South

Cabico’s predicament reflects a broader change in Canada’s manufacturing outlook. A July 2026 KPMG survey of 275 Canadian manufacturers found that 29% had already moved some or all production to the United States, while another 13% planned to make such a move. Meanwhile, 57% reported pausing, reducing or cancelling capital investments because of economic uncertainty and trade pressures. Although 80% intended to keep their headquarters in Canada, future factories, equipment investments and employment opportunities could increasingly shift elsewhere.

The coming months will be critical for Canada’s cabinet industry. American tariffs on covered kitchen cabinets are scheduled to rise to 50% on January 1, 2027, while Canada’s trade tribunal must report its findings on import-related injury by January 15. Ottawa and Washington remain engaged in trade discussions, but relief is not guaranteed. Cabico’s potential American production partnerships remain under consideration rather than finalized. Nevertheless, the situation illustrates a difficult reality: prolonged trade uncertainty can eventually transform temporary business adjustments into lasting changes in where products are manufactured and where workers are employed.

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