For Canadian companies caught in the latest trade confrontation with the United States, tariffs are no longer an abstract risk discussed in boardrooms. Higher costs, disrupted orders and difficult pricing decisions are already appearing in day-to-day operations. Recent research from KPMG found that 66% of surveyed leaders at larger Canadian businesses had adjusted prices to account for at least some tariff costs. But the broader national picture is less sweeping: Statistics Canada’s latest data show roughly one-third of businesses expect U.S. tariffs to hurt them over the next year. The distinction matters. Tariff pressure is real and, in some industries, severe, yet its effects remain concentrated among manufacturers, wholesalers, exporters and companies tied closely to cross-border supply chains rather than uniformly distributed across the Canadian economy.
The Two-Thirds Figure Needs Important Context
There is credible evidence behind the idea that tariff costs are reaching a large share of Canadian corporate balance sheets, but it does not mean two-thirds of every business in Canada says U.S. tariffs have damaged its finances. KPMG’s National Business and Trade Outlook study, conducted from June 25 to July 13, 2026, questioned 359 owners and senior decision-makers at companies with annual revenue above $10 million. It found 66% had changed prices to account for some or all tariff costs. Of those, 35% said their price adjustments covered only part of the costs, while 31% said they had accounted for the full amount. The sample was also unusually trade-oriented: 72% of respondents identified as exporters.
Statistics Canada paints a broader and more restrained picture. Its third-quarter Canadian Survey on Business Conditions found 32.2% of employer businesses expected U.S. tariffs on Canadian imports to negatively affect them over the next 12 months. The agency specifically corrected its August 31 release after the original wording mistakenly said “two in three” businesses expected a negative impact. The correct wording is “one in three.” Earlier 2026 data similarly showed 32.2% reporting that U.S. tariffs had negatively affected their businesses during the preceding 12 months. That correction makes the difference between a serious concentrated problem and a claim that most Canadian firms are already financially impaired.
Manufacturing Is Carrying a Much Heavier Burden
The national average hides dramatically different experiences across industries. In Statistics Canada’s third-quarter 2026 results, 49.7% of manufacturers expected U.S. tariffs to negatively affect their businesses during the next year. Transportation and warehousing followed at 47.3%, while 45.1% of wholesalers expected a negative effect. These industries tend to sit directly inside North America’s tightly integrated supply chains, where materials and components can cross the Canada-U.S. border several times before a finished product reaches a customer. A tariff imposed at one stage can therefore become a cost problem somewhere else in the chain.
The pattern has persisted rather than appearing in a single quarterly reading. In the second quarter of 2026, 54% of manufacturers expected a negative effect from U.S. tariffs, compared with 47.1% of wholesalers and 46.3% of businesses in agriculture, forestry, fishing and hunting. The percentages help explain why stories from factories, equipment makers and commodity producers can sound considerably worse than the aggregate national numbers. For a manufacturer selling into the United States, the issue is not simply whether a tariff exists. It can affect whether an American customer delays an order, whether a Canadian plant absorbs part of the charge or whether production is redirected toward a different market altogether.
Tariff Costs Are Increasingly Showing Up in Prices
Businesses ultimately have only a few ways to deal with a higher cost: absorb it, cut another expense, find a cheaper supplier or charge customers more. Statistics Canada found 27.4% of Canadian businesses had already passed tariff-related cost increases to customers during the 12 months preceding its third-quarter 2026 study. Another 30.4% said they were very or somewhat likely to pass such increases along during the next year. At the same time, 34.9% said they had not experienced tariff-related cost increases, again demonstrating why the impact is significant without being universal.
KPMG’s research shows how different the picture can look among larger, trade-exposed corporations. Its study found two-thirds of respondents had adjusted prices for tariff costs. Research from the Bank of Canada also shows that tariffs can reach retail shelves rather than remaining confined to customs paperwork. A 2026 Bank staff study examining Canadian retaliatory tariffs found prices for tariffed products rose gradually, reaching roughly 6% above comparable products after three months. Researchers estimated that represented around one-quarter pass-through of a 25% tariff. Those findings concern Canadian retaliatory tariffs rather than U.S. tariffs themselves, but they illustrate one of the main financial channels through which a bilateral tariff conflict can affect businesses and consumers.
Companies Cannot Always Pass the Bill to Customers
Raising prices may sound like the straightforward response to a tariff, but many businesses do not have that freedom. A company facing weak demand, aggressive competitors or long-term customer contracts can find itself caught between a higher landed cost and a selling price that is difficult to change. The Bank of Canada reported in its second-quarter 2026 Business Outlook Survey that roughly one-fifth of firms were still reporting cost pressures related to tariffs and trade policies. Respondents described tariff expenses continuing to work their way through supply chains, with steel among the inputs mentioned frequently.
That is where tariff pressure can turn into a margin problem. Export Development Canada’s September 2026 Trade Confidence Index found 32% of surveyed exporters had experienced declining U.S. orders during the previous six months. Twenty percent said they were accepting lower profit margins as part of their response, while 29% were increasing domestic sales, 22% were sourcing more locally and 19% were expanding into new export markets. For an owner, the damage can therefore appear without a dramatic factory closure or layoff announcement. A thinner margin on every order, a more expensive supplier or a delayed customer contract can steadily reduce the cash available for equipment, hiring and expansion.
Small Firms Can Feel an Outsized Shock
Business size also changes how tariff stress appears. Statistics Canada’s analysis of second-quarter 2026 conditions found 32.6% of businesses with one to 19 employees reported a negative impact from U.S. tariffs during the previous year. The share rose to 42.8% among businesses with 20 to 99 employees and 42.7% among those with at least 100 employees. Larger companies were therefore more likely to report direct tariff damage, probably reflecting their greater likelihood of participating in cross-border supply chains, although smaller firms can have fewer resources available when they are affected.
A Vancouver Island company recently illustrated how concentrated that risk can become. Revival Stillworks, which builds distilling equipment, told the Associated Press that some of its equipment going into the United States now faces a 50% tariff. Individual systems can cost between $250,000 and $2 million, and co-founder Darcy Lane said the company had millions of dollars in expected orders over the coming months. U.S. customers account for about half its business. Those figures do not represent the typical Canadian company, but they show why national averages can understate the severity for businesses whose customers, products and suppliers happen to fall directly inside the tariff lines.
Financial Stress Is Real, but the Corporate Sector Is Not in Crisis
There is an important counterweight to the more alarming numbers. The Bank of Canada’s 2026 Financial Stability Report says Canadian non-financial businesses remain in good financial shape overall. Corporate liquidity remains higher, on average, than before the pandemic, profitability remains solid and financial health has been broadly stable even in manufacturing, one of the sectors most exposed to U.S. trade policy. The share of business loans falling behind on payments also stabilized during the second half of 2025 rather than continuing to deteriorate sharply.
That does not mean every business has the same cushion. The Bank noted that impairments on loans to small businesses have continued to rise even as they declined among larger firms, while credit conditions are somewhat tighter for small borrowers. The distinction is crucial when assessing claims about tariffs “hurting finances.” A company can experience falling margins, higher freight bills or delayed investment without being near insolvency. Canada currently appears to have many firms experiencing the former and a much smaller group facing the latter. The risk is that prolonged trade disruption could gradually erode those buffers, particularly for exporters carrying significant debt, thin margins or heavy reliance on a handful of American customers.
Investment and Hiring Can Be Hurt Before Profits Collapse
One of the quieter effects of trade uncertainty is what businesses decide not to do. The Bank of Canada reported in early 2026 that overall investment intentions had strengthened, but tariff and trade uncertainty was still weighing on the plans of a minority of firms. The recovery in investment was concentrated among businesses whose plans were not being affected by trade tensions. That creates a split economy: companies insulated from the tariff dispute can move ahead with expansion, while exposed manufacturers and exporters may keep cash on hand until they understand where tariffs, exemptions and trade rules will settle.
That concern remained current in September. In its September 2 monetary-policy statement, the Bank said newly imposed U.S. tariffs would hit targeted Canadian industries hard even though their direct economy-wide impact was expected to be limited. The Bank also warned that greater uncertainty surrounding the Canada-U.S. trade relationship could cause businesses beyond the directly tariffed sectors to postpone hiring or investment. This indirect effect matters because a machine not ordered, a warehouse expansion postponed or an employee not hired will never appear on a customs invoice. Yet over time, those decisions can influence productivity, wages and economic growth just as surely as a tariff collected at the border.
Exporters Are Rebuilding Their Business Models Around the Risk
Canadian exporters increasingly appear to be treating U.S. trade uncertainty as something that must be managed rather than simply waited out. Export Development Canada reported in September that 72% of exporters planned to pursue new markets during the next two years, up from 65% only five months earlier. The motivation is understandable: 81% of exporters in the study were still active in the United States, while nearly one-third had already experienced weaker U.S. orders. Among respondents, 42% expected sales to remain at reduced levels and 21% expected them to decline further.
Diversification, however, is neither immediate nor free. Companies entering Europe, Asia or Latin America can face different product standards, regulations, shipping distances, languages and distribution networks. A manufacturer accustomed to sending a truck across the Ambassador Bridge cannot necessarily substitute an overseas customer at the same cost. Even so, the shift is visible. Businesses are increasing domestic sales, sourcing locally and seeking additional export markets rather than assuming the United States will always absorb the same share of Canadian production under the same rules. That adaptation may eventually make companies more resilient, but during the transition it can require additional working capital precisely when tariff expenses and weaker orders are already putting pressure on margins.
The Bottom Line Is Serious, but More Targeted Than the Headline Suggests
The latest evidence supports two conclusions at the same time. First, the tariff conflict is imposing genuine financial costs on a meaningful share of Canadian companies, especially manufacturers, wholesalers, exporters and businesses with U.S.-dependent supply chains. Second, those pressures should not be described as affecting two-thirds of all Canadian businesses. Statistics Canada’s latest national figure is 32.2% expecting a negative impact from U.S. tariffs during the next 12 months. Another 46.9% expect no impact, 19.8% are uncertain and 1% expect a positive effect.
The overall exposure also remains concentrated. In September, the Bank of Canada said products hit by the latest U.S. measures represented about 5% of Canadian exports to the United States, limiting their direct macroeconomic effect even while targeted sectors face much sharper consequences. That helps reconcile apparently conflicting headlines: Canada’s corporate sector can remain broadly financially stable while individual manufacturers, exporters and small businesses face major losses. The most defensible “two-thirds” finding is therefore narrower: 66% of the larger, heavily export-oriented business leaders surveyed by KPMG had already changed prices to account for tariff costs. For the Canadian business sector as a whole, the evidence points closer to one-third experiencing or anticipating direct negative effects—and considerably higher exposure in the industries sitting closest to the border.
