While the Canadian Federation of Independent Business (CFIB) reported that overall small business confidence shot up to 58.3 index points this month, CFIB noted that its survey ran from July 7–13, before the newest US tariff threats came to light.
“Although confidence had started to improve, renewed trade uncertainty can quickly undermine progress,” said Simon Gaudreault, CFIB chief economist and vice-president of research, in a media release. “With President Trump’s latest executive orders to hit Canada with 50% tariffs in a month, business sentiment will likely drop in August.”
According to CFIB’s most recent Monthly Business Barometer® report, Canada’s small businesses polled from July 7–13 described the following as barriers to sales or production growth:
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- fuel costs: 60 percent of respondents
- shipping and receiving costs: 45 percent
- capital equipment and technology costs: 38 percent, compared with the 23 percent historical average
- limited physical space: 14 percent, showing a downward trend since last November
“It’s another indicator that small businesses were being careful with investment and expansion plans, as they were not sure about future demand,” Gaudreault noted.
According to Gaudreault, amid “seesawing fuel prices and renewed trade tensions,” small businesses might find it difficult to plan for the future.
Lag in manufacturing sector
Despite the overall rise in small business optimism, CFIB recorded only 53.7 index points for the manufacturing sector, whose confidence has yet to recover from 2023 levels.
“This industry is in a very challenging spot,” said Andreea Bourgeois, CFIB director of economics. “Optimism among manufacturing firms was showing timid signs of improvement, but still below its historical average and most likely would lose momentum going forward.”
CFIB added that tariffs have impacted the sector more significantly than the 2008–09 recession or the COVID-19 pandemic.
“The last thing we want is for small business confidence to take a hit like it did in March 2025 when it cratered to an all-time low after the first round of tariffs was announced,” Gaudreault said.
CFIB shared that small businesses surveyed in the manufacturing sector treated the following as constraints:
- shipping and receiving costs: 63 percent, more than double compared with the 29 percent recorded last February
- input product costs: 77 percent, nearly twice the usual share for manufacturers
“As some manufacturers are considering U.S. production, we need a more competitive fiscal environment here at home and policies that would encourage businesses to stay and invest in Canada,” Bourgeois said in CFIB’s media release.
Other findings
CFIB’s latest Monthly Business Barometer® report also revealed:
- mixed results in terms of small business confidence across provinces
- minimal changes in optimism in most sectors
- an easing future price increase indicator, with small businesses intending to raise prices by an average of 2.7 percent over the coming few months.
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