Small business confidence in Canada has crashed to an unprecedented low as the ongoing trade war with the United States intensifies, according to a report released today by the Canadian Federation of Independent Business. The organization’s Business Barometer long-term index plunged 24.8 points to 25.0 in March, marking the lowest level ever recorded, surpassing previous lows seen during major crises such as the 2020 pandemic and the 2008 financial crisis.
Simon Gaudreault, CFIB’s chief economist and vice-president of research, expressed grave concern over the situation, stating, “Small business owners are feeling pessimistic about their business’s perspectives for the next few months or even beyond. No one knows when the tariff war will end, and businesses are worried the worst is yet to come”.
The impact of the trade war is evident in various aspects of small business operations. To offset losses caused by tariffs and ongoing financial struggles, small businesses are planning to raise prices by an average of 3.7%, up from 3.0% in February – the largest month-over-month increase since the pandemic. Simultaneously, wage increase plans have been scaled back from 2.2% to 1.9%.
The pessimistic outlook is also affecting employment, with 19% of small firms planning layoffs in the coming months, up from 13% in February. Only 11% of businesses are looking to hire.
All sectors have experienced a decline in confidence, with hospitality, manufacturing, transportation, and agriculture reporting the lowest levels. The situation is further exacerbated for agricultural businesses, which are also facing tariffs from China on various products1.
Corinne Pohlmann, Executive Vice-President of Advocacy at CFIB, called for immediate action from policymakers, emphasizing the need for strong support for small businesses. She suggested measures such as making carbon tax rebates tax-free for small businesses and increasing the lifetime capital gains exemption to boost confidence.
Information for this briefing was found via the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
