Statistics Canada (StatsCan) released its survey on business conditions in the second quarter of 2025. The survey found that fewer businesses have a positive outlook for Canada’s economy. This is consistent with other surveys of business confidence, as the fractured relationship between Canada and the US persists. Tariffs imposed by the US and retaliatory tariffs from Canada are expected to hinder trade activity, which could weigh on economic activity, weaken the labour market and push up inflation.

• Businesses with a positive outlook towards the Canadian economy fell to 70% in the second quarter of 2025, which is the lowest level since the first quarter of 2024. Trade tensions with the US, the possibility of rising inflation and a slowdown in labour market conditions are worrying businesses.
• Just under 20% of respondents believe tariffs will have a significant impact on their business, regardless of whether they’re engaged in trade with the US. Another 20% weren’t certain what impact tariffs would have on their business.
• Higher inflation is a major concern for businesses. About 50% believe higher inflation will be an obstacle to their business. Inflation has hovered around the Bank of Canada’s 2% target, but there is a fear that tariffs will push consumer prices higher.
• Businesses are also anticipating obstacles from the cost of inputs, including capital, raw materials and labour. About 40% of businesses expect labour market challenges to impact their growth.

Since trade tensions began, consumer and business confidence have fallen. This has hindered consumer and business spending, given the uncertainty about the economic outlook. StatsCan will announce Canada’s first-quarter economic growth on Friday. A Bloomberg survey shows economists are expecting annualized growth of 1.7%, which would be down from the final quarter of 2024.

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