Demand Determinants 

Primarily focused on commercial aircraft components, Canada’s aerospace manufacturing industry is recovering from the COVID-19 downturn amid rising global demand, especially in aircraft production and maintenance. Growth is supported by exports, defense spending, and innovation in sustainable and fuel-efficient technologies, though supply chain challenges and labor shortages persist. The sector is increasingly shaped by sustainability and digital transformation, with companies investing in clean aviation and advanced manufacturing technologies. Strong federal and Quebec government support for R&D, innovation, and workforce development continues to reinforce Canada’s position as a key player in North America’s aerospace and defense supply chain.

Overview 

Canada’s aerospace sector is a globally competitive, innovation-led industry that plays a pivotal role in the national economy. As one of the world’s top aerospace producers, Canada is particularly recognized for its strength in aircraft manufacturing, engines, landing gear systems, flight simulation, and maintenance, repair, and overhaul (MRO) services. 

Canada’s aerospace sector activities are divided into two main subsectors: 

• Aircraft manufacturing (civil, defense, and space) (65%)
• Aircraft maintenance, repair, and overhaul (MRO) (35%) 

The Canadian aerospace industry employs over 225,000 Canadians and contributes more than $34.2 billion (approximately US$26.3 billion) annually to the GDP. It spans the country, but its epicenter lies in the province of Quebec, which accounts for more than 50% of Canada’s aerospace activity. Greater Montreal alone houses 40% of the Canadian aerospace workforce, and over 75% of the R&D takes place here. Quebec is home to world-renowned aerospace companies such as Bombardier, Pratt & Whitney Canada, CAE, Bell Textron Canada, and Airbus Canada (A220 program). The province also benefits from a highly integrated supply chain, an exceptional talent pool, and a dense network of research centers, universities, and specialized training institutions.

The industry is strongly export-oriented, with approximately 75–80% of Canadian aerospace products and services exported—primarily to the United States, Europe, and Asia. Notably, around 50% of those export revenues were related to supply chain activities, demonstrating the country’s critical role as a component and technology supplier to major global OEMs, such as Boeing, Airbus, and Lockheed Martin. Canada has built a reputation for quality and technological innovation, particularly in niche markets such as regional jets, business aircraft, and advanced simulation technologies.

Canada is also one of the few countries in the world with the capacity to design, produce, assemble, and certify aircraft from nose to tail. This end-to-end capability is a point of national pride and underscores Canada’s global reputation as a trusted aerospace partner. In 2024, Canada ranked in the top five worldwide across key civil aerospace subsegments, including flight simulators, aircraft engines, and aircraft components.

A defining characteristic of Canada’s aerospace sector is its emphasis on research and development (R&D). On a per-employee basis, the industry invests significantly more in R&D than the national average, which helps drive cutting-edge innovations in areas, such as hybrid-electric propulsion, sustainable aviation fuel (SAF), lightweight materials, and avionics. Institutions like the National Research Council of Canada (NRC), CRIAQ (Consortium for Research and Innovation in Aerospace in Quebec), and CARIC (Canadian Aerospace Research and Innovation Consortium) play pivotal roles in supporting collaborative R&D.

The Canadian aerospace sector is also undergoing a significant transformation, shaped by global trends, such as environmental sustainability, digitalization, and supply chain resilience. There is growing demand for next-generation aircraft with reduced emissions and increased fuel efficiency. In response, companies and research institutions are investing in green technologies, electric and hybrid propulsion systems, and smart manufacturing practices.

Quebec, in particular, is positioning itself as a global leader in sustainable aerospace innovation. The province’s focus on electrification, carbon reduction, and workforce upskilling aligns with Canada’s broader goal of achieving net-zero emissions by 2050.

U.S. and Canadian aerospace supply chains are highly integrated. Canada ranked third (after France and Germany) among the top U.S. Civil Aircraft, Engines, and Parts Export destinations and received US$8.9 billion worth of exports in 2024. 

Several U.S.-Canada agreements and regulatory frameworks make it easier for U.S. aerospace companies to export products and services to Canada, especially in civil and defense aerospace. These agreements reduce trade barriers, harmonize regulations, and streamline certification and procurement processes:

• United States-Mexico-Canada Agreement: USMCA eliminates most tariffs and duties on aerospace goods between the U.S. and Canada, and promotes intellectual property protection, digital trade facilitation, and customs streamlining. Aerospace companies benefit from zero tariffs on aircraft parts, engines, avionics, and systems, and rules of origin that favor North American supply chains. USMCA allows U.S. exporters to compete on a level playing field with local Canadian suppliers.
   
• Bilateral Aviation Safety Agreement (BASA): Signed between the FAA (U.S.) and TCCA (Transport Canada Civil Aviation), BASA provides mutual recognition of certifications, airworthiness standards, and safety approvals for civil aviation products. It covers aircraft and engine certification, maintenance organizations, and flight simulators and pilot training. BASA streamlines aircraft and component approvals, significantly reducing time and cost for U.S. aerospace exporters operating in Canada.
   
• U.S.-Canada Defense Production Sharing Agreement (DPSA) (1956–present): DPSA allows U.S. and Canadian companies to compete equally for defense contracts in each other’s countries. Canadian firms are treated as domestic suppliers under U.S. defense procurement law, and vice versa. Supported by the Industrial and Technological Benefits (ITB) Policy in Canada, which incentivizes Canadian participation in defense projects, U.S. companies can bid directly on Canadian defense procurements and form partnerships with Canadian firms to meet offset obligations.
   
• Customs and Border Facilitation Agreements, including initiatives like Trusted Trader / C-TPAT, NEXUS, and Single Window systems. These programs expedite customs clearance, reduce inspections for certified aerospace shipments, and ensure secure and efficient cross-border supply chains. Aerospace firms moving time-sensitive or high-value parts benefit from faster customs processing and lower compliance burdens.
   
• World Trade Organization (WTO) Agreement on Trade in Civil Aircraft: Both the U.S. and Canada are signatories. The agreement eliminates tariffs on civil aircraft and related parts among participating countries, supports free trade in aerospace components, simulators, and engines, and reinforces zero-duty treatment for civil aerospace exports beyond bilateral frameworks.

These agreements create a highly favorable environment for U.S. aerospace companies looking to export to or partner in Canada—especially in Quebec, where a large portion of Canadian aerospace activity is concentrated. By leveraging these frameworks, U.S. firms can access one of the world’s top aerospace markets with minimal regulatory friction, trusted certification standards, and robust government-to-government cooperation.
 

Sources: UN Comtrade Database (HS-88, aircraft, space craft and parts thereof); Exchange Rates from the IRS Website 

Leading Sub-sectors 

• Aircraft Manufacturing: Canada has full capability to design, manufacture, assemble, and certify entire aircraft—making it one of the few countries with such capacity. 
• Aircraft Parts, Systems & Sub-Systems: This is the largest segment, contributing over 60 % of Canada’s aerospace manufacturing revenues. It includes engine parts, composites, avionics systems (flight control, sensors), and supply chain manufacturing for global aircraft OEMs.
• Aircraft Fuselage, Wing, Tail & Similar Assemblies: Major Canadian firms—like Avcorp (aerostructures) and Magellan Aerospace—produce fuselage sections, wing and tail assemblies using advanced composites and alloys. HérouxDevtek also supplies actuation systems integrated into such assemblies.
• Tail & Wing Assemblies and Parts: Many Tier1s in Quebec and Ontario produce these via precision machining, composites, special coatings and assembly
• Aircraft Engines Parts and Components: Canada ranks in the top 5 globally for civil aircraft engine production. Canadian-made engines are exported worldwide and are known for innovation in fuel efficiency and hybrid-electric propulsion.
• Flight Simulation and Training Equipment: Canada is a global leader in civil flight simulators and pilot training systems. CAE, headquartered in Montreal, is a world-leading provider of simulation-based training for both civil and military aviation. This sub-sector combines aerospace, software, and AI technologies.

Opportunities

The Canadian aviation sector is highly integrated with that of the United States and Europe. Over 500 aerospace businesses are active in Canada. These span the full value chain from OEMs, parts manufacturers, MRO providers, avionics firms, to emerging AAM/drones innovators. Large aerospace companies in Canada include Airbus Canada, Avcorp Industries, Bell Helicopter Textron Canada Limited, Boeing, Bombardier, CAE, CMC Electronics, De Havilland Canada, GE Aerospace, Goodrich, Héroux-Devtek, L-3 Harris, Safran, Lockheed Martin, Magellan Aerospace Corporation, Pratt & Whitney Canada, Raytheon, Rolls Royce, StandardAero, and Thales. 

Canada’s most significant aircraft manufacturing platforms include Airbus A220, Mitsubishi CRJ, Bombardier Global Express and Challenger Business Jets, Bombardier Learjet, and Bell Textron’s 407, 412, 429, 555 rotorcraft. Significant engine manufacturing is done by Pratt & Whitney Canada (P&WC); all UTC engines with less than 11,000 pounds of thrust are made in Canada.

Opportunities for U.S. – Canada collaboration: 

U.S. companies can best capture business opportunities in Canada by participating in local trade shows and industry events. Canadian representatives prefer to do business with companies with whom they can build a long-term relationship. In addition to selling directly to clients, U.S. companies should consider establishing distributorships or hiring local sales representatives as Canada has a large landmass and having local representation will facilitate greater access.

Ample opportunities lie in:

• Tier 1 & Tier 2 Supply Chain Integration, as U.S. firms are well-positioned to provide high-precision aircraft parts and components, avionics systems, advanced materials (e.g., composites, alloys), and precision machining and tooling, etc. 50% of Canada’s aerospace export revenues were related to supply chain activity. Canadian OEMs actively seek reliable U.S. suppliers with ITAR compliance, high-tech capabilities, and collaborative R&D models.
• Advanced Avionics and Aerospace Systems: particularly with the rising demand for next-generation avionics, cybersecurity solutions, and AI-driven flight systems for connected aircraft opens the door for U.S. firms’ cutting-edge technologies.
• Green and Sustainable Aerospace Solutions, as Canada and Quebec are prioritizing hybrid-electric propulsion, Sustainable Aviation Fuels (SAFs), lightweight and recyclable aircraft materials. Programs like Canada’s Strategic Innovation Fund (SIF) and Quebec’s Horizon 2026 are funding green aviation projects—U.S. companies with climate-aligned solutions can partner, license, or sell into this growing segment.
• Training, Simulation, and MRO Support where demand is high for flight simulators, maintenance software and hardware, and technical training and certification platforms.
• Digital Aerospace Technologies: Canada’s aerospace sector is increasingly adopting digital twin and simulation tools, predictive maintenance software, IoT/IIoT solutions for smart manufacturing. U.S. aerospace tech firms and SaaS providers can export software platforms and cloud-based aerospace solutions, especially those proven in FAA or DoD environments.

To maximize opportunities, U.S. exporters should consider:

• Leveraging support and engaging with the U.S. Commercial Service in Canada for market entry support.
• Exploring partnerships with established Canadian OEMs and Tier 1/2 suppliers to fulfill local content rules.
• Attending trade shows, like the International Business Convention for the Aerospace Industry, Aeromart Montreal.
   

Canadian representatives prefer to do business with companies with whom they can build a long-term relationship. In addition to selling directly to clients, U.S. companies should consider establishing distributorships or hiring local sales representatives as Canada has a large landmass and having local representation will facilitate greater access.

Resources

Major Events and Trade Shows in Canada: 

• Aéro Montreal International Aerospace Innovation Forum, 2026
• Aéro Montreal Symposium 2025 on the Canadian Defense and Security Market, October 9, 2025, Montreal, QC
• Aeromart Montreal – International Business Convention for the Aerospace Industry, 2027
• Aerospace Industries Association of Canada (AIAC) Canadian Aerospace Summit, October 28 - 29, 2025, Ottawa, ON  
• Air Transport Association of Canada (ATAC) Canadian Aviation Conference & Tradeshow, November 18-20, 2025, Montreal, QC
• Defense Security & Aerospace Exhibition (DEFSEC) Atlantic, September 30 – October 2, 2025, Halifax, NS

Industry Associations 

•  Aéro Montréal – Quebec’s aerospace cluster association – aeromontreal.ca
• aiac.ca
• Air Transport Association of Canada (ATAC) – Represents commercial air carriers and flight training organizations – atac.ca
• Canadian Aeronautics and Space Institute (CASI) – Professional institute for aerospace science and engineering – casi.ca
• Canadian Association of Defence and Security Industries (CADSI) – Industry association for defence, security, and cybersecurity – defenceandsecurity.ca
• Canadian Council for Aviation & Aerospace (CCAA) – Workforce development, training, certification for aviation/aerospace – avaerocouncil.ca

Canadian Government

• Innovation, Science and Economic Development Canada (ISED) – ised-isde.canada.ca
• National Research Council of Canada (NRC) – nrc.canada.ca
• Canadian Space Agency (CSA) – asc-csa.gc.ca
• Transport Canada (TC) – tc.canada.ca
• Nav Canada (non-profit, arms-length) – navcanada.ca

Commercial Service Contacts

For additional information on civil/dual-use aerospace, please contact Commercial Specialist Pavel Sevastian at Pavel.Sevastian@trade.gov or by phone at (514) 908-3673.

For additional information on military aerospace, please contact Commercial Specialist Mehdi Azeriah at Mehdi.Azeriah@trade.gov, or by phone at (613) 688-5176.