Ontario small business owners are bracing for the worst amid some of the most uncertain economic times the province has ever faced.
Canada’s most populous province is expected to be one of the hardest hit by a tariff war with the U.S., and confidence among small business owners in Ontario has plummeted to historic lows.
The Canadian Federation of Independent Business (CFIB)’s Business Barometer long-term index took a total nosedive in March, with the small business confidence indicator dropping 24.8 index points to an all-time low of 25 nationwide.
To put this sharp decline into perspective, this figure represents lower levels of small business owners’ confidence than any point recorded during the pandemic years in the early 2020s, the 2008 financial crisis, or even in the wake of the September 11 attacks in 2001.
CFIB
“Small business owners are feeling pessimistic about their business’s perspectives for the next few months or even beyond. It’s hard to make critical decisions for the long, medium or short term when so much can change within a matter of hours,” wrote Simon Gaudreault, CFIB’s chief economist and vice president of research.
Where Ontario sits among other provinces
Every Canadian province recorded a drop in confidence levels, and Ontario ranked among the most pessimistic, behind only Nova Scotia.
Ontario registered a staggering drop of 23.4 index points, and experts warn that the situation could only get worse in the months and years to come.
CFIB
“No one knows when the tariff war will end, and businesses are worried the worst is yet to come,” said Gaudreault.
“Chinese tariffs are coming at the worst possible time given the ongoing uncertainty in our trading relationship with the United States,” he warned.
How do these fears among business owners affect the average worker and consumer?
The CFIB reports that weak optimism has business owners in Canada cutting back on hiring, noting that, as of March, 19 per cent of small firms are planning layoffs in the coming months. This represents a sharp increase from the 13 per cent recorded in February, and comes amid already-high unemployment rates.
Similarly, only 11 per cent of Canadian small business owners surveyed said they were looking to hire in the current climate.
Wages are also set to fall, with the nationwide average wage increase falling to 1.9 per cent in March, from 2.2 per cent in February.
As for consumers, the latest data shows Canadian small businesses plan to raise prices by an average of 3.7 per cent in March, up from 3 per cent the month before. This is the largest month-over-month increase recorded in this category since the pandemic hit in 2020.
“Business confidence is at abysmal levels. If this doesn’t send a strong warning signal to policymakers that businesses urgently need all the help they can get to weather this storm, including a much-improved business environment here in Canada, then I’m not sure what will,” said Corinne Pohlmann, executive vice-president of advocacy at CFIB.
Pohlmann advocates for “proactive actions, such as making carbon tax rebates for small businesses tax-free, adopting full mutual recognition right across Canada, increasing the lifetime capital gains exemption and ensuring there are supports that are accessible to small businesses to help them through this challenging ordeal would significantly boost confidence at a time when small businesses need it the most.”
