Government Loans Just Delay Tool & Die Makers Pain

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Canada Is Trading One Bad Dependency for Another 
and Calling It Strategy

By Jim Taylor

In a workshop on the outskirts of Windsor, Ontario, a precision mould sits finished on a shop floor. It cost hundreds of thousands of dollars to build, took weeks of skilled labour to complete, and has an American customer waiting for it. It cannot be shipped. The tariff bill to move it across the border ” which would have been roughly $1,500 a few weeks ago ” now exceeds $30,000. The owner, a man in his fifties who has built his business over three decades, is wondering whether to take on government debt to survive a trade war that may never end, or simply close the doors and retire.

This is not an abstraction. This is Canadian industrial policy in 2026 ” and it is failing.

The federal government's response to the crisis engulfing Canada's tool, die and mould-making sector has been to offer loans. A billion-dollar program through the Business Development Bank, available on "favourable terms," designed to help affected companies "address immediate pressures." What it cannot do ” what no loan can do ” is make the tariffs go away. It asks businesses operating on razor-thin margins to borrow money in order to pay an illegal tax, then repay that money out of margins that were already insufficient before the tariff hit. It delays the reckoning. It does not solve it.

Meanwhile, in Beijing, Prime Minister Mark Carney has been forging what his government calls a "new strategic partnership" with China ” complete with a 50 per cent export growth target by 2030 and a managed opening for Chinese electric vehicles. The message, both domestic and diplomatic, is that Canada has options. That we are not captive to Washington's whims. That there is another path.

There isn't. Not one that replaces what we stand to lose.

The numbers are not subtle. In 2025, Canada ran a merchandise trade surplus with the United States of $81.6 billion. With China, we ran a deficit. China accounts for roughly four per cent of Canada's total goods and services exports. Even if Carney achieved his ambitious 50 per cent growth target with Beijing by 2030 ” which would be remarkable ” China would still represent a fraction of what the United States takes from us every year. The U.S. market absorbs nearly 72 per cent of everything Canada sells abroad. There is no arithmetic under which a Chinese trade relationship replaces that. Not in five years. Not in ten. Not ever, given the structure of our economies and the geography of our continent.

What is particularly troubling is that Canada has lived through the precise cautionary tale the China pivot invites. In 2019, Beijing blocked Canadian canola ” ostensibly over food safety, transparently as retaliation for Canada's arrest of Huawei executive Meng Wanzhou. Canadian farmers were devastated. The lesson was clear: China weaponizes trade access the moment it serves a political purpose. The canola deal Carney struck in January was, in part, a resolution to that episode ” a restoration of access that Beijing had cut off entirely for years. We are now treating the arsonist as the fire brigade.

To be fair, Carney's China gambit is not entirely irrational. It is, at its core, a negotiating signal” an attempt to demonstrate to Washington that Canada has alternatives, and therefore cannot simply be squeezed without consequence. As a short-term diplomatic tactic, there is logic to it. As a long-term economic strategy, it is a category error.

And it is making things worse. The Trump administration has seized on the China deal as evidence of Canadian bad faith ahead of the CUSMA review. Threats of 100 per cent tariffs followed within days of Carney's Beijing visit. Canada, one policy expert observed, "got played" ” the Americans manufactured the perception of a CUSMA violation to generate negotiating leverage, and Canada handed them the ammunition to do it.

So what should Canada actually do?

First, stop pretending loans are solutions. The tool and die sector ” home to approximately 58,000 workers, supplying automotive, aerospace, medical device and defence industries on both sides of the border ” needs direct relief, not more debt. Ottawa should be making the case aggressively to Washington that these tariffs are harming American manufacturers who depend on Canadian precision tooling. That case is true, it is documented, and it is the strongest lever Canada has: American companies are collateral damage in this trade war, and their lobbyists have more influence in Washington than any Canadian diplomat.

Second, stop conflating trade diversification with trade replacement. Diversification is genuinely valuable ” reducing the share of exports going to any single market is prudent risk management. But diversification pursued as a substitute for fixing the U.S. relationship is a fantasy that provides political comfort while the real problem festers. The goal should be to repair and stabilize the North American trading relationship while methodically building complementary relationships elsewhere ” not to stage-manage a pivot to China as a negotiating bluff.

Third, be honest with Canadians about what CUSMA actually provides and what it does not. The agreement does not expire until 2036. Canada is not at a cliff edge this July. The leverage exists to negotiate carefully rather than desperately ” and a bad deal that concedes on dairy, digital policy and China relations while leaving Section 232 tariffs in place is worse than no deal at all.

The man in Windsor with the mould on his shop floor does not need a bilateral agreement with Beijing. He needs the tariff removed. He needs a government that understands the difference between a diplomatic signal and an economic strategy ” and has the clarity to pursue one without sacrificing the other.

Canada's greatest trading asset has always been proximity, integration and trust with the world's largest economy. We did not build that in a day, and we cannot replace it with a canola deal and a photo opportunity on the Great Wall.