Tariffs strain Canada–U.S. trade ties as businesses brace for higher costs: Statistics Canada

Trade tensions and shifting tariff policies between Canada and the United States are weighing on business confidence and profitability, with many firms expecting higher costs and price increases in the months ahead, according to a report from Statistics Canada.

New results from the Canadian Survey on Business Conditions for the fourth quarter of 2025 show more than one-third of Canadian businesses report negative impacts from tariffs imposed by either country. The survey was conducted from Oct. 1 to Nov. 5 amid ongoing uncertainty over bilateral trade policy.

Among businesses that export to the U.S., which account for the vast majority of Canadian exporters, more than one-third say U.S. tariffs have had a major negative impact on their operations. Exporters reported that an average of 36.7 per cent of their total sales over the past year went to the U.S. market.

Looking ahead, 41.5 per cent of exporters expect profitability to decline over the next three months, while nearly four in 10 anticipate higher operating expenses. More than one-quarter expect to raise prices, and just over one-fifth plan to seek customers outside the United States. Still, about two-thirds of exporters reported an optimistic outlook over the next year.

On the import side, more than half of businesses that import from the U.S. said they were subject to Canadian tariffs over the past three months, particularly in manufacturing and service-related sectors. One-third expect those tariffs to have a minor negative impact, while about one-quarter anticipate a major negative effect.

Statistics Canada said nearly four in 10 importers expect increases in operating expenses and selling prices in the coming months, with many planning to raise prices, seek alternative suppliers or increase domestic sourcing over the next year.

The report also points to broader ripple effects across the economy. Nearly 15 per cent of all businesses expect supply chain challenges in the next three months, most commonly due to higher input costs and delivery delays. Almost 40 per cent of all businesses said they are likely to pass tariff-related cost increases on to customers over the next year.

Despite the pressures, just over two-thirds of importers and most businesses overall reported an optimistic outlook for the year ahead, though roughly one-quarter to one-third expressed pessimism or uncertainty.