This article draws on a keynote delivered by Professor Romel Mostafa, Director of the Lawrence National Centre for Policy and Management, to the Macdonald Cartier Club on November 14, 2025.
Canada is entering a period of profound economic adjustment, driven by two powerful forces reshaping global markets and national competitiveness. The first is the resurgence of tariffs in the Trump II era and the broader geopolitical realignments they have triggered, forcing countries and companies to rethink their position in an increasingly fragmented global economy. The second is the rapid advance of artificial intelligence, which is accelerating the transformation of industrial systems and redefining how value is created. Each force is disruptive on its own; together, they signal a pivotal turning point in Canada’s socio-economic future.
Nowhere is this tension more visible than in Southern Ontario. It is the region most exposed to tariff shocks and supply-chain volatility, and simultaneously the region best positioned to lead the next technological wave. Its deep integration with U.S. manufacturing, its concentration of advanced industries, and its fast-growing AI ecosystem make Southern Ontario the focal point of Canada’s economic future.
As Romel Mostafa observed, “Southern Ontario sits at the very center of these challenges and opportunities—it is where global pressures meet local realities.”
A Fractured Trade Landscape, and a Rapidly Changing Technology Shift
Tariffs under the Trump II administration underscore the magnitude of the shift underway. What many initially assumed would be a short-term dispute has evolved into a structural change in U.S. strategy, driven by an infatuation with a protectionist industrial model focused on reshoring and revenue generation.
The fundamentals tell a different story. Canada’s goods surplus is driven largely by discounted energy exports that benefit U.S. consumers, is offset by a U.S. services surplus, and is reinforced by trends in foreign direct investment: Canadian firms invest more in the U.S. than vice versa, directly supporting job creation there. Research shows that U.S. manufacturing job losses were driven primarily by automation and Chinese import competition, not trade liberalization with Canada.
Yet the facts have not altered the trajectory of trade negotiations. A once-reliable trading partner now presents far greater volatility.
At the same time, AI is accelerating the Fourth Industrial Revolution. It is no longer merely a general-purpose technology like electricity; in addition to its broad applicability, it is becoming, as Mostafa notes, “a thinking system in its own right,” capable of learning and improving in real time.
Governments are increasingly treating AI as strategic infrastructure. The EU has implemented its AI Act, the United States has released an AI Action Plan, and China has embedded AI across its industrial and security strategy. The race is now as much for computational power and data as it is for markets.
Signs of industrial transformation are already emerging. AI is enabling more flexible and responsive production, blurring the boundaries between digital and physical manufacturing. Canadian firm Promise Robotics offers a vivid example: its AI-enabled platform can frame a custom home, including roof and doors, in a single day.
A recent survey shows that 95% of manufacturers globally are ramping up investment in AI and machine learning, and the World Economic Forum estimates that industrial AI could raise global GDP by roughly two percent annually through productivity gains.
The implications for labour are equally profound. In previous industrial revolutions, labour disruptions typically stabilized within 15 to 20 years. But, Mostafa argues, if machine intelligence continues to improve—albeit non-linearly—the labour market may face ongoing waves of disruption rather than periodic adjustments.
Many entry-level tasks are already being automated across sectors, while new roles are emerging in data stewardship, algorithm oversight, AI system management, and interdisciplinary problem-solving. Canada’s ability to build a workforce capable of lifelong adaptation will determine its long-term competitiveness.
Southern Ontario at the Centre of Canada’s Economic Transformation
Southern Ontario sits at the centre of both challenges. The heart of Canada’s industrial fabric—autos, machinery, ag‑tech, food processing, and advanced manufacturing—is deeply woven into North American value chains. When tariffs rise or supply chains stall, the effects are immediate—layoffs in Windsor and production suspensions in Brampton—with spillover impacts reaching London, the GTA, and other regional centres as workers relocate for new opportunities.
Yet this same region holds the foundations of Canada’s future capacity: world‑leading AI institutes, more than 600 start-ups experimenting with AI, and a growing pipeline of companies at the frontier of robotics, cleantech, fintech, and health-tech. It is precisely this tension, exposure and opportunity layered together, that makes Southern Ontario the decisive arena for Canada’s economic renewal.
Meeting this moment requires more than layering new programs onto old structures. As Mostafa argues, economic policy, industrial strategy, and national security now form a single problem set. The old model—anchored in a U.S.-centric trade framework—cannot hold in a world defined by geopolitical competition and rapid technological change.
These forces demand a systems view that links infrastructure, trade, technology, and industrial development across both supply and demand. On the supply side, that means prioritizing projects and industrial capabilities that attract private capital and strengthen advanced and defence manufacturing, reducing Canada’s exposure when global rules shift. On the demand side, it means using public procurement to create early markets for Canadian technologies, making real progress on interprovincial trade barriers, and forging clear, actionable pathways for firms to reach new export markets.
Human capital is the third pillar of this strategy. An economy defined by continuous technological change cannot treat skills as an afterthought. Training programs must build AI fluency across sectors, tie reskilling to emerging industrial priorities, and create apprenticeship‑style pathways in which students and mid‑career workers learn by applying AI tools in real workplaces. In Mostafa’s view, a workforce capable of adapting alongside machine intelligence is as critical to Canada’s resilience as any piece of physical infrastructure.
Seen this way, Southern Ontario is more than a regional story—it is the proving ground for whether Canada can turn strategy into execution. At its core, this is about agency. Canada can stand by and absorb the shocks, or it can seize this moment to reshape industrial capacity, modernize regulatory foundations, and invest in people at the pace technological change demands. If it chooses the latter, Southern Ontario has the potential to anchor a stronger, smarter, and more resilient Canadian economy.