‘The government has put in place measures to support Canadian companies so they can continue to do business at home’
The federal government has confirmed it will not impose penalties on Canadian companies that offshore jobs to the United States or other countries in response to rising U.S. tariffs, according to a recent report.
"The government is not implementing legislative tools to penalise Canadian companies who relocate abroad," a finance ministry official said in a statement to Global News.
Instead, Ottawa is reaffirming its commitment to supporting domestic business investment.
"On the contrary, the government has put in place measures to support Canadian companies so they can continue to do business at home," the official added.
This clarification follows a call last week from Unifor, Canada’s largest private-sector union, urging the federal government to activate the Foreign Extraterritorial Measures Act (FEMA).
The union argues the law could prevent Canadian firms from offshoring operations to comply with U.S. trade policies.
“Further aggressive and defensive action must be taken to solidify Canada’s industrial economy,” Unifor National President Lana Payne in a letter dated May 16 to Prime Minister Mark Carney. She stressed that the ongoing impact of American protectionist policies is already being felt through investment delays, temporary layoffs, and plant closures in the auto, steel, aluminium, and forestry sectors.
However, such a penalty on companies could backfire on Canada, said Michael Devereux, an economics professor at the University of British Columbia, in the Global News report.
“We’re in the middle of a very uncertain and complicated series of negotiations on the general trading relationship with the U.S., and so I think it would just complicate things,” he said in an interview.
Devereux said offshoring penalties could both incentivize Canadian firms already eying the U.S. or other foreign markets to leave entirely to avoid punishment, leaving behind “a stable of inefficient corporations” no longer willing to invest or expand abroad.
“It could end up being a reverse failed industrial policy,” he said.
Unifor’s call comes after, in April Honda came out with a statement saying that it will continue its Canadian operations in the foreseeable future, noted Global News.
"We can confirm that our Canadian manufacturing facility in Alliston, Ontario, will operate at full capacity for the foreseeable future and no changes are being considered at this time," the automaker said.
Honda added: "We constantly study options for future contingency planning and utilise short-term production shift strategies when required, to mitigate negative impacts on our business."
In April 2024, numerous stakeholders called on Justin Trudeua, then prime minister, to ensure job security for Canadian auto workers following Honda’s $15-billion EV project in the county.
