Canadian Business Outlook Gloomy as Tariffs Persist

That’s according to the bank’s business outlook indicator survey, released Monday (Oct. 20) and showing a slight uptick, though still in negative territory: -2.3 during the third quarter, compared to -2.4 in the prior quarter.

“Firms’ outlooks and intentions remain subdued despite a gradual improvement in sentiment and a slight easing of perceived uncertainty,” the survey said. “Expectations for growth in domestic and export sales remain soft due to concerns about the broad economic effects of trade tensions.”

Business leaders told the central bank they do not expect sales growth to strengthen. The survey includes comments from exporters in the steel and aluminum sectors, which reported “especially weak outlooks” and “significant layoffs due to the tariffs.”

“Although some exports of primary aluminum have been redirected to Europe, these exporters view this strategy as an unsustainable alternative to US market access because of concerns about long-term profitability,” the survey said.

Companies also said they expect cost increases due to tariff and trade-related uncertainty. At the same time, dwindling demand is preventing them from passing costs on to consumers.

Also Monday, a report by Reuters said that global companies expect the impact of tariffs to soften as more countries negotiate new trade deals with the U.S.

Although companies expect their combined cost of tariffs to total between $21 billion and $22.9 billion this year, they expect it to fall to $15 billion next year, the report said, citing Reuters’ analysis of corporate statements, regulatory filings and earnings calls.

Meanwhile, PYMNTS reported last week that many companies have quantified the cost of tariffs, embedded it into forecasts, and reworked supply and sourcing strategies.

Days earlier, Philadelphia Fed President and CEO Anna Paulson had said that tariff-induced price increases have been “somewhat smaller than anticipated” and that the increases thus far are unlikely to leave “a lasting imprint on inflation.”

Paulson added that many businesses had unlocked ways to avoid passing on increased costs to their customers in order to preserve their market share.

The PYMNTS Intelligence report “The Enterprise Reset: Navigating Tariffs, Supply Chain Shifts and Cost Pressures” shows that companies have lowered costs, diversified foreign suppliers, localized sourcing and reworked operations to increase their resilience and stay competitive.

“In dealing with the impact of tariffs, companies have broken away from business as usual by replacing suppliers, redesigning products and leaning into just-in-time inventory models,” PYMNTS wrote.