Municipalities provide an early warning for trade war impacts on the Canadian economy, new report shows

LONDON, ON, Sept. 24, 2026 /CNW/ -- Municipalities are the first order of government to see the local effects of economic disruption, from delayed investments and rising project costs to growing pressure on local businesses.

A new report from the Federation of Canadian Municipalities (FCM), the Lawrence National Centre for Policy and Management at the Ivey Business School and the City of London entitled Where Trade is Felt: Canadian Municipalities and U.S. Trade Disruption provides the first national benchmark of how Canadian communities are experiencing trade-related pressures and responding on the ground.

"This report reveals that impacts show up locally before they appear in broader economic data, whether it's shifts in business confidence, delayed investment decisions or challenges facing local employers," said FCM President Tim Tierney. "That's why understanding what's happening on the ground is so important to building an effective response to economic challenges, like tariffs."

Of those surveyed, 80 percent reported taking steps to respond to trade-related pressures, rising to 100 percent among municipalities reporting the highest levels of disruption. Participating communities reported establishing tariff-response teams, launching Buy Canadian procurement initiatives, expanding business-retention outreach and strengthening investment-attraction efforts.

The findings also suggest that the effects of the trade war are not felt evenly across Canada. Rather than being determined by population size, communities' exposure to impacts is shaped by their local economic makeup, including sectors such as auto manufacturing, oil and gas, and steel. As a result, municipalities provide an important lens for understanding where economic pressures are emerging and how they are affecting residents, businesses, and infrastructure projects.

Cost pressures and supply-chain disruptions are the most commonly reported severe impacts, alongside delays or cancellations in investment.

"The findings underscore the importance of local perspectives in identifying where trade pressures are emerging and how they are impacting communities across Canada," London Mayor Josh Morgan, who is also Chair of FCM's Big City Mayors' Caucus. "Municipalities bring real-time insights that can help ensure Canada's response reflects conditions on the ground. As the trade environment continues to evolve, working together will be essential to help communities adapt, strengthen local economies and build resilience for the future."

The report has three options to strengthen the Team Canada response: ensure the federal government is using data and insight from municipalities in its approach; improve the flow and timing of information during disruptions to municipalities; and unblock challenges to domestic response such as reducing interprovincial barriers.

"The findings point to the value of drawing on municipal intelligence and local response capacity as part of the broader Team Canada effort in a rapidly evolving trade environment," says Professor Romel Mostafa, Director of the Lawrence National Centre for Policy and Management. "There is an opportunity to strengthen coordination and enhance consideration of local realities in national strategy and response, within the existing division of responsibilities across orders of government."

Conducted among 31 municipalities in nine provinces in May, the research captures an important snapshot of how communities initially responded to trade disruptions. While the trade environment continues to evolve, the findings provide an important benchmark for understanding how trade-related pressures are emerging in communities across Canada and how municipalities are responding on the ground.

As governments look to strengthen Canada's economic resilience and competitiveness, investing in local infrastructure will help communities support businesses, attract investment and position Canada for long-term growth. The findings underscore the importance of investing in the communities where growth, trade and opportunity happen.

For more information, please see the backgrounder.

The Federation of Canadian Municipalities is the national voice of municipal governments, with over 2,000 members representing more than 90 percent of the Canadian population.

SOURCE Federation of Canadian Municipalities (FCM)

For more information please contact: FCM Media Relations, [phone], [email protected]