The threat of tariffs from the United States coming as early as Saturday is stirring concern among Canada’s small business community, particularly for firms who export goods outside the country.
Small businesses have largely lost confidence since November, the month when U.S. President Donald Trump won re-election, according to the Canadian Federation of Independent Business (CFIB).
The small business advocacy group published its latest Business Barometer on Thursday, a survey of member organizations that offers a broad gauge of business confidence. The latest report captures feelings of more than 1,000 small businesses surveyed online between Jan. 7 and 14.
The CFIB said its indicator for business optimism had declined for a second month in a row, dropping the index down to 54.6 and marking a loss of five points since November.
The decline in confidence was particularly pronounced among exporting small businesses, who reported an 8.1 point drop over the past two months.
The latest readings come as the Trump administration maintains a threat to impose blanket tariffs of up to 25 per cent on Canadian goods entering the U.S. as of Feb. 1.
Recent weeks have also seen political turmoil bubble up in Canada, with the announced resignation of Prime Minister Justin Trudeau triggering a race to replace him as Liberal leader as Parliament is prorogued.
“The threat of upcoming U.S. tariffs and political changes in Canada have installed a lot of fog in front of the windshield,” said Simon Gaudreault, CFIB’s chief economist and vice-president of research, in a statement.
“Our economy is already paying the price of this lack of direction. The uncertainty is making it harder for businesses to plan ahead and make critical decisions, such as hiring or investment.”
Gaudreault said Canadian small businesses need a “signal” from governments that they’ll be supported amid fears of tariffs hitting the economy over the weekend.
A significant share of businesses tell the CFIB that they’re struggling with low demand (52 per cent) and issues related to taxes or regulation (70 per cent).
Andreea Bourgeois, CFIB’s director of economics, said in a statement that the “jury is still out” on the success of the two-month federal “tax holiday,” which kicked off in mid-December.
While the proposal was aimed at boosting sales and relieving costs for cash-strapped Canadians, Bourgeois said the changes came with a rash of administrative challenges and costs to implement.
Some business sectors covered by the tax holiday have seen a boost in long-term confidence according to CFIB, including the retail and hospitality sectors. Most industries remain below their historical confidence levels, however.