Small businesses feeling the pressure amid trade war: CFIB

A person opening their wallet with Canadian money inside. (Pexels)

Small businesses are feeling the strain of the ongoing trade war between Canada and the United States, according to a new report.

On Thursday, the Canadian Federation of Independent Business (CFIB) released its latest Main Street Quarterly Report, which found that the Canadian economy grew by 0.8 per cent at the start of the year but is expected to contract in the second quarter of 2025.

According to the CFIB, the economic decline will come from “historically low long-term business sentiment” brought on by the ongoing trade war and tariffs.

“Unfortunately, we’re seeing a severe contraction in the second part of the year,” said Andreea Bourgeois, the CFIB’s director of economics.

“We’re talking about a severe drop in GDP, which will cause a lot of other issues from an economic standpoint.”

The report also said that small businesses are feeling the pressure, adding that the U.S. tariffs will likely drive up the costs of conducting business, which could lead to inflation.

Bourgeois added that these small business owners are facing a lot of unknowns and are preparing for the worst.

“If you put yourself in the shoes of a small business owner, there are tariffs one day, then there are no tariffs, then there are some exceptions, and then there are new tariffs…There are so many nuances to these tariffs that everyone is confused,” she said.

“I think business owners right now are expecting the worst.”

Retail analyst Bruce Winder explained that independent businesses tend to struggle when there are significant disruptions to the economy, adding that they don’t have the same flexibility to pivot as big chain stores.

“They often don’t have the same scale and flexibility to move their supply chains quickly to avoid tariffs,” he said.

Winder noted that the trade war has caused uncertainty for consumers, which means they are spending less money at independent stores.

He added the uncertainty is also forcing wholesalers to increase their prices, which gets passed along to small businesses.

“If you’re an independent business, you’re trying to find ways to cut costs… you may have to lay off staff, unfortunately, or cut hours or cut marketing, or do other things to try to shave your costs down so you can still make money,” he said.

As for what could bring small businesses some relief in these tough economic times, Winder said the best thing would be if the trade war ended. However, if the tariffs continue, he suggests loans or support from the government.

The full CFIB report can be found online.