Business and consumer confidence across Canada is sinking as U.S. import tariffs rise.
New reports from the Bank of Canada show declining sentiment among Canadian businesses and consumers as trade tensions with the U.S. worsen.
The central bank’s latest business outlook survey found that 32% of companies are now planning for an economic recession in Canada over the next year.
That’s up from only 15% of businesses that expected a recession in the previous two quarters.
A smaller number of businesses expect sales growth to improve over the coming year at 43% compared with 53% in the fourth and final quarter of 2024.
Additionally, plans for investments in machinery, equipment, and staff declined among Canadian businesses.
Less than half (31%) of businesses that were polled said they expect investment in machinery and equipment to be higher over the next year compared with 48% in the previous quarter.
The proportion of businesses expected to increase their staff count in the next year fell to 32% from 45% at the end of 2024.
And two-thirds (67%) of businesses believe that their costs will be pushed higher if widespread import tariffs are implemented by the U.S. as threatened.
A separate survey of Canadian consumer expectations found that concerns about job security increased because of the trade conflict.
Notably, a majority of Canadian consumers said they are reducing or planning to reduce their overall spending because of trade uncertainty.
The Bank of Canada’s next interest rate decision and monetary policy report is scheduled for April 16 of this year.