The latest report from the Canadian Federation of Independent Business (CFIB) reveals concerning trends for Canadian businesses. According to a flash survey conducted between March 5 and March 7, the CFIB’s Business Barometer index has plummeted to 25, marking the lowest figure since records began in 2000. This decline reflects a significant wave of pessimism among business owners, with nearly 60% anticipating a decline in their performance over the next year, reminiscent of the sentiment during the onset of the Covid-19 pandemic in March 2020.

Rising Concerns About Inflation

Business owners are increasingly worried about inflation, with expectations soaring to an average of 3.7% in March, up from 3% in February. This rise is notable compared to the historical average of 2.2%. These inflationary pressures are compounded by the current trade tensions between the United States and Canada.

Trade Tariffs Impacting Business Climate

On March 4, the U.S. government, under President Donald Trump, imposed substantial tariffs of 25% on most Canadian goods and 10% on energy imports. While some products were exempted under the North American Free Trade Agreement, these tariffs have led to retaliatory measures from Canada. In response, Canada has introduced tariffs on approximately C$60 billion (around $41.9 billion) worth of U.S. goods, including essential commodities like steel, aluminum, and various consumer products.

Economic Forecasts Amidst Trade Tensions

Economists warn that a prolonged trade dispute could push Canada into a recession. The Bank of Canada estimates that exports could take an 8.5% hit if these tariffs remain in place for an entire year. Coupled with a weakening currency and increased import costs, businesses are bracing for rising prices.

Government Support for Affected Sectors

In light of these challenges, the federal government has committed billions to assist exporters through Export Development Canada. Furthermore, it has announced plans to offer C$500 million in favorably priced loans aimed at businesses directly impacted by the tariffs and their supply chains.

Mixed Sentiments Among Business Owners

Despite the grim statistics, it’s worth noting that 86% of surveyed firms still reported their current business situation as either good or satisfactory, a figure that remained stable since February. This suggests that many businesses had yet to feel the full effects of the newly imposed tariffs shortly after their introduction.

As the landscape for Canadian businesses continues to evolve, stakeholders are watching closely to see how these economic challenges will unfold in the coming months.