For four decades, Alain Ouzilleau built Cabico into one of Canada’s major kitchen cabinet manufacturers, with American customers playing a central role in its growth. Now, escalating U.S. tariffs are forcing him to consider something he once avoided: moving some production south of the border.
American tariffs on imported kitchen cabinets currently stand at 25%, with an increase to 50% scheduled for January 1, 2027. Cabico has already experienced declining shipments and substantial layoffs, while other Canadian manufacturers are struggling with shrinking orders, foreign competition, and rising costs.
The situation highlights a troubling dilemma for Canadian businesses. Moving production to the United States could help preserve American customers, but it could also threaten Canadian manufacturing jobs and the communities that depend on them. With another tariff increase approaching, companies are facing decisions that could reshape the industry for years.
A 40-Year Business Faces an Unthinkable Decision
Alain Ouzilleau did not spend four decades building Cabico expecting American trade policy to influence where its cabinets would be made. Yet the Quebec-based manufacturer’s future now depends on whether it can keep supplying U.S. customers at competitive prices. Before Trump’s tariff measures, Cabico shipped approximately 90% of its products to the United States. That concentration supported Canadian production and expansion, but it also left the company exposed when crossing the border became more expensive.
Ouzilleau told Reuters that Cabico is exploring partnerships with American producers to manufacture some products within the United States. The company has not announced a relocation, and its owner has emphasized preserving Canadian manufacturing and jobs. Still, even considering a production arrangement represents a major departure for a business rooted in Canada. The decision reaches beyond factory geography: Cabico must balance customer relationships, costs and the livelihoods of workers who helped build the company.
Trump’s 50% Tariff Deadline Is Approaching
The threatened 50% tariff is not yet in effect. The United States imposed a 25% duty on covered imported kitchen cabinets and bathroom vanities beginning October 14, 2025, using Section 232 of the Trade Expansion Act, a national-security provision. The measure also covers cabinet parts. Washington initially planned to double the cabinet duty on January 1, 2026, but President Donald Trump postponed that increase for a year after citing ongoing negotiations with trading partners.
Under the revised presidential proclamation, the rate is scheduled to climb to 50% on January 1, 2027, unless an applicable agreement changes the treatment of imports. For manufacturers, that distinction matters. A future increase is not the same as a tariff already being collected, but businesses cannot ignore it while quoting orders and planning production. The approaching deadline creates uncertainty for Canadian factories and American customers, where contracts, installation schedules and materials are arranged months ahead.
Cabico Invested $30 Million Before the Tariff Crisis
Cabico entered the tariff dispute after making major commitments to manufacturing in Canada. Over five years, the company invested roughly C$30 million in expanding capacity and automation at its plants in Quebec and Ontario. Those investments were intended, in part, to serve the American market efficiently. Instead, Reuters reported that Cabico’s U.S. shipment volumes have fallen 25% compared with 2024, and the company has laid off more than a quarter of a workforce that numbered 700.
Behind those figures are skilled workers whose roles depend on a steady flow of orders. Cabinet production involves design, cutting, finishing, assembly and quality control, often requiring experience that cannot be replaced overnight. When demand weakens, machinery and production space may sit underused, even as overhead remains. Ouzilleau has said retaining Canadian jobs is his priority, but the arithmetic is difficult. Years of capital investment cannot shield a factory from tariffs imposed at the border.
More Than 25,000 Canadian Jobs Are Connected to the Industry
The cabinet industry’s vulnerability extends well beyond one established manufacturer. The Canadian Kitchen Cabinet Association estimates that the sector generated C$4.7 billion in sales in 2024 and supports more than 25,000 jobs across approximately 3,700 businesses. About 97% of those companies employ fewer than 50 people. That makes the industry’s economic importance easy to underestimate: many of its workplaces are modest in size, even though their collective contribution is substantial.
Small manufacturers often operate with less financial room to absorb abrupt changes in trade costs. Unlike a multinational with plants in several countries, a family-owned cabinet shop may have one facility, a limited customer base and specialized equipment. Reuters reported that the industry has already shed more than 10% of its workforce since the initial tariffs. Losing those positions affects more than paycheques. It can weaken local suppliers, reduce apprenticeship opportunities and erode technical skills that take years to develop.
Another Ontario Cabinet Maker Cuts 40% of Its Workforce
The experience of Muskoka Cabinet Company shows how tariff pressure can change operations. Its president, Luke Elias, who heads the Canadian Kitchen Cabinet Association, told Reuters that the Ontario manufacturer has cut 40% of its 70 employees. The business is operating just three days a week and has stopped investment to conserve cash. For a company built around custom orders and skilled trades, a shorter workweek signals more than a scheduling adjustment.
Elias warned that many manufacturers could close if the U.S. cabinet tariff doubles in January. The immediate problem is keeping enough business flowing through existing plants, without taking risks that could deepen losses. Delaying equipment purchases may protect cash today, but it also makes future expansion harder. Workers who remain employed face uncertainty about hours and the company’s prospects. Muskoka’s difficulties illustrate why a tariff dispute that appears abstract in national politics feels immediate inside a smaller factory.
Manitoba Manufacturer Absorbs Tariffs to Keep American Customers
Other manufacturers are attempting to preserve American customers by accepting smaller profits. At Manitoba-based Decor Cabinet Company, chief financial officer Dave Schellenberg told Reuters that the business has absorbed part of the tariff costs rather than passing the burden to buyers. That approach can maintain relationships with U.S. dealers and contractors, but it leaves less money available for wages, maintenance and investment. Schellenberg also described additional complications as Washington expanded tariff coverage to more cabinet components.
Decor has used a federal Work-Sharing arrangement to help retain skilled employees instead of relying solely on layoffs. Canada’s program allows eligible workers to share a reduced workweek, with Employment Insurance benefits providing some income support during the slowdown. It is designed for temporary business disruptions, not as a permanent replacement for orders. The trade-off is clear: employees may keep their jobs, while companies buy time to recover, but neither can absorb indefinite losses.
Cheaper Imports Make the Canadian Market Difficult to Reclaim
Selling more cabinets in Canada is not a simple substitute for losing American orders. Using 2024 trade data, the Canadian Kitchen Cabinet Association estimates that manufacturers export C$610 million in cabinetry to the United States annually. The association believes 20% to 30% of the industry is exposed to U.S. cabinet tariffs. For companies built around cross-border relationships, finding customers at home would require more than changing a shipping address.
The domestic market is facing competitive pressures. Luke Elias told Reuters that Canadian factories are operating at just over half the capacity they used three years ago, while cheaper imported products, including those from China, limit opportunities to increase local sales. Canada’s government has also identified evidence of rising imports and price undercutting, although an investigation is examining the extent of injury. That leaves manufacturers squeezed from two directions: restricted access to their export market and fierce competition for Canadian projects.
Ottawa’s 25% Import Surtax Offers Limited Relief
Ottawa has acted to protect cabinet makers at home. On July 31, 2026, the government introduced a provisional 25% surtax on certain imported wood cabinets, vanities and components. The measure can remain in place for up to 200 days while the Canadian International Trade Tribunal investigates whether increased imports are causing serious injury to domestic producers. Exemptions cover certain trading partners, including the U.S. and Mexico, and qualifying developing countries.
Industry leaders argue that the measure has not done enough to slow imports, and Reuters reported that some manufacturers want duties of at least 100%. Those demands represent the industry’s position, not an adopted government policy. The tribunal must report its findings by January 15, 2027, after which Ottawa can consider permanent safeguards if warranted. Even successful Canadian import protection, however, would not remove the American tariffs restricting exports. Canadian cabinet makers need solutions on both sides of the border.
American Builders and Homebuyers Could Also Face Higher Costs
Tariffs do not stop at the Canadian factory gate. In the United States, the importer of record is responsible for paying customs duties, although suppliers, dealers, builders and customers may share the economic burden through prices and negotiated discounts. Consider a hypothetical cabinet shipment with a customs value of US$10,000. A 25% duty adds US$2,500, while a 50% duty adds US$5,000 before other charges. That calculation concerns the imported product, not the price of a kitchen renovation.
The National Association of Home Builders has warned that tariffs on construction materials and cabinets can raise building and remodeling costs, worsening housing affordability. U.S. International Trade Commission research found that American importers bore almost all the cost of certain previous tariffs, though those findings do not establish the exact impact of today’s cabinet duties. Canadian exporters may nevertheless cut prices or absorb costs to preserve orders, spreading the pressure across both economies.
Canadian Manufacturers Face a Critical Decision Before January 2027
With January 1 drawing closer, cabinet manufacturers face two deadlines. The U.S. Section 232 duty on covered cabinet imports is scheduled to rise to 50% that day, while Canada’s trade tribunal must report on import safeguards by January 15. Ottawa and Washington have signaled progress in trade talks, and Prime Minister Mark Carney welcomed efforts by lawmakers to challenge tariffs. Neither development guarantees relief for cabinet makers.
Canadian government guidance confirms that meeting Canada-U.S.-Mexico trade agreement rules does not exempt covered cabinetry from Section 232 duties. Additional trade measures may affect products, complicating exporters’ calculations. Cabico is considering American production partnerships, not announcing a departure from Canada. Ouzilleau has emphasized that preserving Canadian factories and jobs remains his priority. But the deadline is approaching, and manufacturers must weigh how long they can absorb losses while awaiting an agreement. Their choice could shape where future investments and manufacturing jobs end up.
