A turbulent start to the year under pressure from tariffs
The 30-day reprieve granted yesterday should not encourage a step backward. While the "America First" policy is likely to turn into "America Alone," we must continue to invest in our manufacturing startups and provide them with local space to grow. Scaling an innovative manufacturing process certainly requires massive investment, but it is becoming imperative to keep these companies in our country, or risk seeing them migrate to the United States.
For several years, we have been feeling a general economic slowdown, beginning in 2022, which has particularly affected the manufacturing sector. This economic contraction, linked to high interest rates and persistent inflation, has had a direct impact on manufacturing GDP, which is expected to decline by 0.8% in 2023 after growth of 2.8% in 2022. In this already difficult context, the tariffs announced by the Trump administration and the resulting trade war risk having an even harsher impact on the manufacturing ecosystem and hardware technology startups.
As Julie White , the new CEO of Manufacturiers et Exportateurs du Québec ( MEQ ), points out, "the manufacturing industry [is] not just factories. They are innovation hubs, talent incubators, research and development centers that propel Quebec into the future. But this vital ecosystem is now threatened by an unprecedented trade storm." The Garage&co team shares this conviction regarding the major repercussions of these tariffs, not only on the manufacturing industry, but also on the development of new hardware technology startups.
Read Julie White's open letter
What impact for hardtech startups?
Despite the postponement of the tariff threats until next month, it is crucial to anticipate their effects to enable Quebec's hardtech and manufacturing startups to weather the storm. Quebec has strong assets to meet this challenge and transform this turbulence into an opportunity to accelerate the rise of its hardtech sector. As revealed in the white paper Hardtechfest: Where the Future of Technology Is Taking Shape , four key levers can be activated:
1. Improving access to pre-seed financing: Optimizing early-stage financing mechanisms is crucial. Canada must develop dedicated financing programs to provide grants and investment vehicles tailored to the specific needs of hardtech entrepreneurs.
2. Investment in fundamental infrastructure : Business development labs in hardware technologies are not always accessible to entrepreneurs who have never had access to those in academia.
3. Accessibility to the local supply chain and the national manufacturing innovation network : Adding tax incentives and policies that encourage hardtech startups will enable them to integrate into local supply chains. Targeted tax credits, subsidies, or compensation can encourage sourcing from local suppliers, thereby strengthening the resilience of our manufacturing ecosystem.
4. Scaling-up support system : Creating clear pathways from prototype to production requires a comprehensive support system that includes: manufacturing readiness programs, access to specialized equipment and facilities, technical expertise networks, and market expansion support. This system must bridge the gap between innovation and commercial production, enabling companies to grow in Canada.
We could also add to this the opportunity that all levels of government have to become early adopters of choice for Quebec hardtech start-ups and growth companies.
Quebec manufacturing companies must also focus on diversifying their markets and customers, developing new innovative products and continuously improving their operational efficiency, while remaining agile in the face of the volatility of the economic environment.
The “From Micro-Series to Mass Production” event: an invitation to share visions and roadmaps
Join us for “From Micro-Series to Mass Production: Scaling a Unique Manufacturing Process,” a meetup bringing together four entrepreneurs who have built and scaled innovative manufacturing processes in Quebec:
- Katherine Homuth (SRTX),
- Nick Saltarelli ( Mid-Day Squares ),
- Sophie Roy (ex-Oatbox)
- Pierre-Édouard Goriaux ( Fabulous )
Moderated by Julie White (MEQ), this inspiring conversation will explore the challenges, opportunities, and innovations shaping our manufacturing ecosystem. The goal: to uncover roadmaps to position Quebec as a global champion of innovative reindustrialization.
🎟 Book your ticket here (33% off with code Community )
Learn to act better: Webinars not to be missed
Several online events are being organized to help us better understand the issues surrounding tariffs and identify levers for action:
- CCI's US Tariffs Briefing by the ICC 🗓 February 4 from 1 p.m. to 2 p.m. | Register
- Tariff Threats: Mitigate the Impact of Customs Tariffs through the CCMM 🗓 February 5 from 1 p.m. to 1:45 p.m. | Register
- Rates and assistance measures by the FCCQ 🗓 February 6 from 8 a.m. | Register
- Impact of the new American administration on the Quebec economy by Desjardins Business 🗓 February 10 from 8:30 a.m. to 9:30 a.m. | Register
A resilient ecosystem, driving responsible innovation
Beyond the sole issue of pricing, the ambition is to create a resilient and ambitious hardtech ecosystem, capable of expanding internationally by relying on its unique strengths:
- Cutting-edge interdisciplinary research, at the convergence of major technological fields (AI, advanced materials, bio-manufacturing, etc.)
- A creative entrepreneurial culture, driven by a new generation of visionary startups
- A resolute commitment to societal and environmental issues, at the heart of the new paradigms of "techno-responsible" innovation
These are all assets that resonate with major global technological trends and position Quebec as a pioneer in innovative and sustainable reindustrialization. The coming months will be decisive in unlocking this potential and making Quebec a global beacon of hardtech. Mobilizing the entire ecosystem—entrepreneurs, investors, researchers, and public decision-makers—will be essential to transform the experience and build an agile, creative, and efficient industry of the future.
Let's continue the discussion
Do pricing issues directly affect you? Join our HardTech LinkedIn group to exchange ideas, ask questions, and stay up-to-date on the latest industry news.