Canadian small businesses are feeling the Canada–U.S. trade fight far beyond loading docks and border crossings. New research from Merchant Growth says 65% of Canadian small-business owners believe trade tensions with the United States affected their business in 2026. Among that group, 52% say their business is performing worse than it was at the same point in 2025. The distinction matters: the finding is about year-over-year deterioration, not a claim that conditions are the worst ever.
The pressure is showing up in several places at once—supplier bills, customer demand, revenue, investment decisions and access to cash. Broader data from Statistics Canada and the Canadian Federation of Independent Business point in the same direction, showing tariff-related costs and uncertainty are influencing pricing, confidence and growth plans. For many owners, the trade fight has become a day-to-day operating problem rather than a distant policy dispute.
The Headline Numbers Cover More Than Just Exporters
Merchant Growth’s headline numbers come from a September survey of 500 Canadian small-business owners who were members of the Angus Reid Forum. The research was conducted from September 1 to September 8, 2026, in English and French. Merchant Growth describes the sample as representative and notes that, for comparison purposes, a probability sample of that size would carry a margin of error of plus or minus 4.3 percentage points, 19 times out of 20. The company also surveyed 1,500 adult Canadian consumers separately. That methodology is important because the 65% figure reflects owners’ reported experience of trade tensions, not a direct measurement of tariff charges paid by every respondent.
The timing also matters. The poll was taken as the latest round of Canadian counter-tariffs was taking effect. Ottawa announced tariffs of 15%, 25% and 50% on selected U.S. goods, effective September 8, in response to new U.S. measures. That meant businesses were answering after more than a year of trade disruption and just as a fresh round of costs and uncertainty was entering the system.
Higher Costs Are the Most Common Pressure Point
For affected firms, higher costs are the most common way the trade fight is being felt. Merchant Growth found that 38% of small-business owners reported increased costs for goods or supplies because of trade disruptions. Another 23% said they had absorbed higher costs because they could not raise prices enough to offset them, while 12% reported higher costs for equipment or machinery bought from the United States. For a small operator with limited purchasing power, even modest increases can become difficult to spread across a large sales base.
Statistics Canada’s third-quarter business data reinforce that pricing pressure is not confined to one private poll. It found that 27.4% of Canadian businesses had passed tariff-related cost increases on to customers during the previous 12 months, and 30.4% said they were likely to do so over the next year. CFIB’s September barometer adds another layer: price-increase plans among small firms rose to an average 3.3%, while fuel, tax and regulatory costs, and wages were all major cost constraints. Tariffs are therefore landing in an environment where many firms were already watching margins closely.
Revenue and Customer Demand Are Being Hit at the Same Time
The trade fight is not only an expense story. Merchant Growth found that 27% of small-business owners reported lower revenue linked to the disruption, while 26% said customer demand had weakened. Those numbers help explain why the 52% year-over-year deterioration figure is so significant. A business can sometimes manage a higher supplier bill by trimming expenses or changing vendors; it is much harder to recover when costs rise at the same time customers become more cautious.
CFIB’s September data show how broad that demand problem has become. Weak demand was the leading growth constraint for 49% of small businesses, even though not all of those firms were directly exposed to U.S. trade. Earlier CFIB research on 2025 performance also found that businesses describing the year as poor were more likely to report tariff-related effects such as higher debt, reduced hiring and paused investment. The findings do not prove that tariffs caused every weak result, but together they show a consistent pattern: trade disruption is overlapping with already-soft demand, making it harder for smaller companies to absorb shocks without sacrificing revenue or profit.
Investment and Hiring Decisions Are Starting to Change
When uncertainty lasts long enough, it begins to change what businesses do next. Merchant Growth found that 13% of owners had delayed or cancelled a planned purchase or investment specifically because of U.S.–Canada trade tensions. Looking more broadly at the pressures facing their businesses, 15% said they had delayed or cancelled an expansion investment, 11% had reduced staff or employee hours, and 10% had paused hiring. These are not dramatic shutdown numbers on their own, but they matter because small-business growth often happens through many modest decisions—one vehicle, one machine, one renovation or one additional employee at a time.
CFIB found a similar relationship when it examined business performance in 2025. Firms reporting a poor year were far more likely to say they had increased debt, reduced hiring or paused investments because of trade-war effects. In September 2026, CFIB’s long-term small-business confidence index fell to 47.9, below the 50-point level at which owners expecting weaker performance outnumber those expecting stronger performance. Internationally active firms were less optimistic than businesses focused only on the domestic market, suggesting trade exposure is influencing planning as well as current results.
‘Buy Canadian’ Support Is Not Reaching Every Cash Register
One of the more surprising findings is the gap between consumer intentions and what many owners say they are seeing at the cash register. Merchant Growth’s consumer polling found that 56% of Canadians said they had shopped more from Canadian small businesses over the previous 12 months than in earlier years. Supporting the local economy and Canadian jobs were the most commonly cited motivations, and U.S. tariffs were also a significant factor. Yet 67% of small-business owners said the Buy Canadian movement had produced no noticeable impact on their business so far in 2026; only 24% reported a positive effect.
Price helps explain part of the disconnect. Among consumers surveyed, 52% identified price as a barrier to buying from Canadian small businesses, while 31% cited product availability. That creates a difficult loop for owners whose costs are already rising. A store, contractor or manufacturer may benefit from stronger public interest in Canadian products, but if its inputs become more expensive and customers remain price-sensitive, patriotic demand cannot automatically translate into stronger margins. The result can be more goodwill without enough additional profit to offset higher operating costs.
Businesses Are Reworking U.S. Relationships—but Slowly
Some businesses are responding by changing who they buy from and who they sell to, but the shift remains gradual. Merchant Growth found that 13% of small-business owners had stopped working with U.S. suppliers or partners, 9% had found new suppliers outside the United States, and 8% had stopped selling to U.S. customers. Another 11% said they planned to look for new customers or suppliers outside the U.S. over the next six months. Those figures show diversification is happening, but they also underline how difficult it is to replace deeply integrated North American relationships quickly.
CFIB’s own polling suggests the trust problem is wider than the immediate tariff bill. In February 2026, 52% of Canadian small businesses told the federation they no longer considered the United States a reliable trading partner, while 75% said the tariff fight had strained relationships with U.S. partners or clients. For a small company, switching suppliers can mean new freight routes, different minimum order sizes, unfamiliar standards or less favourable payment terms. Diversification can reduce long-term exposure, but the transition itself can add costs before it creates resilience.
Billions in Support Exist, but Many Owners Say They Have Not Felt It
Governments have introduced increasingly large support programs, but the Merchant Growth data suggest many owners have not yet felt much benefit. Its September poll found that 68% of small-business owners had seen no noticeable impact from government tariff-relief initiatives. That result needs careful timing context. Ottawa expanded its response in late August and September, including an additional $1.5 billion for the Regional Tariff Response Initiative, a new $500 million liquidity stream through BDC’s Pivot to Grow program, and an additional $2 billion for the Canada Strong Diversification Fund. Some of those measures were only being rolled out as the Merchant Growth research was being conducted.
Earlier CFIB research helps explain why support can exist on paper without reaching many firms quickly. In February, the federation found fewer than 1% of surveyed small businesses had applied to the Regional Tariff Response Initiative and 77% were unaware of it. Ottawa has since expanded the program and adjusted support, so those February figures should not be treated as a verdict on the newer package. Still, the gap highlights a practical challenge: eligibility, awareness and speed matter as much as the headline value of a program.
For Some Owners, the Business Strain Is Becoming Personal
The financial strain is increasingly personal for some owners. Merchant Growth found that 22% of small-business owners had used personal credit—including credit cards, home-equity lines of credit or personal loans—to fund their business. At the same time, 22% said they planned to raise customer prices over the next six months, 11% expected to delay or cancel an investment, and 9% planned to reduce staff or hours. Most were not signalling retreat: 41% said they intended to hold steady with their current business plans. But 14% said they planned to wind down their business, a figure that stands out in a period of weak confidence.
The next several months will show whether those intentions harden into action. CFIB’s September confidence reading of 47.9 suggests more owners expected weaker rather than stronger performance over the coming year, and internationally active firms were especially cautious. The most important takeaway from the 65% and 52% figures is therefore not that every small business faces the same threat. It is that trade uncertainty is combining with costs, soft demand and financing pressure in ways that can turn a manageable disruption into a difficult decision about prices, hiring, investment—or whether to keep operating at all.
