Canadian firms bracing for volatility amid inflation and trade tensions: report

Canadian businesses are increasingly concerned about economic volatility as inflation resurfaces and trade tensions escalate, according to a new report from the Canadian Chamber of Commerce’s Business Data Lab (BDL).

The Business Insights Quarterly (Q2 2025) shows business confidence has declined for the fourth consecutive quarter, with exporters — traditionally among the most optimistic — registering their lowest outlook in years.

“This quarter marks a critical inflection point. Rising costs, tariff threats and policy uncertainty are creating a more volatile landscape for Canadian businesses,” said Patrick Gill, vice-president of the Business Data Lab. “Mid-sized and large companies — key anchors of our supply chains — are feeling the squeeze from both shrinking demand and increasing costs.”

Among the report’s findings:

• Confidence remains below the neutral benchmark of 100, indicating sustained pessimism.
• Exporters report the lowest confidence levels, with tariff concerns, supply chain issues and soft consumer demand at play.
• Trade policy uncertainty is at its highest since CUSMA negotiations.
• Debt and borrowing constraints are mounting, particularly for mid-sized businesses.
• Inflationary pressure is rebounding, with more companies planning to raise prices.
• More firms report being affected by Canadian counter-tariffs (37 per cent) than U.S. measures (35 per cent).

While most companies have yet to respond directly to U.S. tariff threats, many exporters are adjusting by targeting non-U.S. markets and revising supply chain strategies.

“Canadian businesses continue to demonstrate resilience,” Gill said. “But the path ahead is more complex. Strategic planning, policy responsiveness and access to timely data will be essential for navigating this new era of economic volatility.”