CME praises key Fall Economic Statement measures but warns more action needed to combat U.S. tariff pressures

Canadian Manufacturers & Exporters (CME) issued a statement calling on the federal government to fundamentally rethink the tax and regulatory barriers hindering growth and investment. The organization notes that as Canada’s manufacturing sector is being threatened by protectionist and competitiveness pressures from its largest trading partner, bold action is needed to safeguard manufacturing jobs and ensure the resilience of Canada’s economy.

“Canada is facing a significant economic threat that demands a decisive, coordinated federal response,” said Dennis Darby, president and CEO of CME. “Canadian manufacturers need political stability, and a government committed to implementing policies that foster resilience, attract investment, and drive growth.”

CME notes that while the 2024 Fall Economic Statement (FES) includes some positive measures to support manufacturers, including some long championed by the organization, more work is needed to address the serious challenges posed by proposed U.S. tariffs and competitive pressures.

CME has strongly advocated for an extension of the Accelerated Investment Incentive, originally set to phase out between 2024 and 2027, as it is essential for maintaining Canada’s investment competitiveness. The organization is therefore pleased that the government has reinstated immediate expensing measures from 2025 to 2029, with a gradual phase-out from 2030 to 2033. This extension, the largest spending measure in the 2024 FES at $17.4 billion over six years, is a critical step toward bolstering Canada’s investment climate, states CME.

CME supports the government’s $1.3 billion investment in a comprehensive border security package for Public Safety Canada, the Canada Border Services Agency, the Communications Security Establishment, and the Royal Canadian Mounted Police. Strengthening Canada’s border security is essential for safeguarding public safety and reducing tensions with the U.S.

CME has strongly advocated for a modernization of the SR&ED program as Canada suffers from a low rate of business R&D spending, which is one of the critical factors holding back the ability to grow the economy and create jobs.

The changes announced to the SR&ED program are positive and align closely with many of the reforms CME has been advocating for. Expanding eligibility for the enhanced 35 percent refundable tax credit to Canadian public corporations and reinstating the ability to claim capital expenditures represent wins for manufacturers. CME states that while the proposed measures are encouraging, the key challenge will be ensuring the CRA administers the program in a way that fosters the certainty businesses need to confidently participate.

To support the development and retention of intellectual property in Canada, the 2024 FES includes the government’s commitment to introduce a patent box regime – a key policy CME has consistently championed.

“The manufacturing sector makes a significant contribution to the Canadian economy and strengthens communities across the country. Manufacturers will continue to work closely with policymakers to build on these measures and advocate for deeper reforms that will strengthen the sector and protect Canadian jobs in the face of tariff pressures from the U.S.,” Darby concluded.