Nearly 3 in 10 Canadian Businesses Plan to Pass Every Dollar of Trump Tariff Costs to Customers: CFIB

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The growing trade war between Canada and the United States is creating another headache for consumers: businesses preparing to transfer higher costs directly to their customers.

A survey by the Canadian Federation of Independent Business (CFIB) found that 30% of responding small-business owners expect to pass along every dollar of additional costs arising from new American tariffs and Canadian counter-tariffs. Others are preparing to absorb those expenses, even as operating costs and economic uncertainty squeeze their finances.

The findings reveal a difficult choice facing independent businesses. Raising prices could drive away customers already struggling with household expenses. Keeping prices unchanged could mean sacrificing profits, delaying investments or cutting jobs. With trade negotiations unresolved, the financial consequences are spreading well beyond companies that ship products across the border.

Three in Ten Businesses Expect Customers to Cover the Full Cost

The CFIB’s latest special trade-war survey presents a revealing picture of how Canadian entrepreneurs expect to handle escalating tariff expenses. Approximately 30% of respondents said they intend to pass 100% of their additional tariff-related costs to customers through higher prices. Another 5% expect to transfer between 75% and 99% of those expenses, while 6% plan to pass along between 50% and 74%. Together, those categories show that 41% anticipate passing on most of their additional costs.

The findings are not evidence that prices have already increased by those amounts. They measure what business owners expect to do as the trade dispute develops. The survey also found that 42% anticipate absorbing most of the extra expenses themselves, including 14% who expect to absorb everything. Another 18% remain uncertain about their pricing decisions. For consumers, the message is that some costs may eventually reach store shelves, but businesses are responding differently depending on their circumstances.

The Survey Captures the Pressure on Independent Businesses

CFIB conducted its special U.S.–Canada Trade War Survey between August 28 and August 31, 2026, collecting responses from 1,545 members who own or operate independent Canadian businesses. Participants represented different industries and regions, providing insight into the pressures facing smaller companies. The specific question about passing tariff costs to customers received 1,259 responses. Business owners were asked how much of the additional costs from the August American tariffs or September Canadian countermeasures they expected to recover through higher prices.

The distinction between survey intentions and confirmed outcomes matters. CFIB gathered responses through a controlled-access online survey of its members, not a random selection of every Canadian business. Its report provides a hypothetical margin of error for a probability sample of comparable size, which should not be treated as proof that the member responses represent all companies nationally. Nevertheless, the findings offer detailed evidence of how independent business owners are planning their next financial decisions.

The Latest U.S. Tariffs Have Created a Two-Way Cost Problem

The latest escalation began when the Trump administration imposed 50% tariffs on approximately C$27.6 billion worth of Canadian goods, effective August 22, 2026. The measures were introduced under Section 338 of the U.S. Tariff Act of 1930 and affected products across several industries. Canada responded by imposing additional tariffs of 15%, 25% and 50% on selected American imports beginning September 8. The federal government said its response was designed to protect domestic industries facing increased American trade barriers.

The financial burden depends on which direction goods cross the border. American importers generally pay U.S. duties when purchasing covered Canadian products, potentially pressuring Canadian exporters to reduce their selling prices. Canadian companies importing tariffed American merchandise pay duties on entry into Canada and may recover those expenses from customers. A retailer importing affected appliances, for example, faces a different calculation from a manufacturer selling components to an American buyer. Both can lose profitability, but the mechanism differs.

Importers and Exporters Face Different Pricing Decisions

CFIB found that 46% of surveyed small exporters selling to the United States had products affected by the new American tariffs. Among Canadian businesses importing from the United States, 49% reported exposure to Canada’s retaliatory measures. Manufacturing, wholesale, retail and construction were among the industries facing substantial disruption. Those figures demonstrate why the conflict affects more than major factories or multinational corporations. Smaller businesses can encounter additional expenses through their suppliers, customers or existing contracts.

The pricing responses also differ. Among surveyed exporters affected by the new U.S. tariffs, 30% expected to pass along all additional costs. For importers affected by Canadian counter-tariffs, that proportion reached 35%. However, 37% of affected exporters and 40% of affected importers expected to absorb most of the costs instead. The exporter pricing subgroup contained only 76 responses, so its percentages deserve particular caution. The contrast nonetheless highlights a central problem: businesses cannot simply add every tariff expense to an invoice and assume customers will continue purchasing the same quantity.

Many Businesses Cannot Afford to Raise Prices

For a small business operating on narrow margins, choosing whether to increase prices is rarely straightforward. A neighbourhood retailer may know that regular customers will notice even a modest increase, while a manufacturer supplying larger clients may be locked into contracts that limit immediate adjustments. Competition also matters. A company selling easily substituted products risks losing customers to rivals that absorb more of the tariff costs or source goods from countries unaffected by the same duties.

CFIB’s September Business Barometer provides additional evidence of that pressure. Nearly half of surveyed businesses, 49%, identified weak demand as their leading constraint on growth. Fuel expenses were causing difficulties for 62%, while tax and regulatory costs troubled 61% and wage costs challenged 60%. That combination leaves owners with limited room to manoeuvre. Raising prices could protect individual sales margins, but it may also discourage purchases. Absorbing the costs can preserve customer relationships in the short term while weakening cash flow needed for payroll, repairs and future investment.

Bank of Canada Research Shows How Tariffs Reach Store Shelves

Research published by the Bank of Canada in June 2026 helps explain why tariffs do not always translate into equivalent increases at checkout. Researchers examined daily posted prices at seven major Canadian retailers and compared products exposed to earlier Canadian retaliatory tariffs with unaffected products. Prices of tariffed goods increased gradually, reaching approximately 6% above their previous level after three months. That represented roughly one-quarter of the 25% tariff being examined.

An October 2026 Bank of Canada working paper explored the broader economic effects of import tariffs. Its model estimated that a 25% counter-tariff would increase Canada’s aggregate price index by approximately 0.66%, compared with 1.25% under a calculation based only on direct cost pass-through. Consumer switching toward other products was an important reason for the difference. These studies examined different tariff settings and should not be treated as precise forecasts for the latest trade measures. They demonstrate that competition, purchasing decisions and business margins can influence how much of a tariff ultimately reaches consumers.

Inflation Is Already Putting Pressure on Household Budgets

Canadian consumers are confronting these possible price increases while inflation remains a concern. Statistics Canada reported that the Consumer Price Index rose 3.0% year over year in August 2026, matching July’s increase. Grocery prices increased 2.8%, while transportation prices climbed 7.5%. Gasoline costs were particularly elevated, adding pressure to households and businesses that depend heavily on driving, deliveries and shipping. Not all of these increases were caused by tariffs, making it important to distinguish trade-related costs from wider inflation.

Small-business pricing intentions suggest additional pressure could develop. CFIB reported that its members’ average planned price increase climbed to 3.3% in September, compared with 2.6% in August. That is a measure of business expectations, not a forecast for the national inflation rate. The organization’s long-term business confidence index also dropped to 47.9, below the 50-point threshold. These findings illustrate the difficult environment in which companies must decide how much customers can reasonably afford to pay without reducing their purchases.

Some Companies Are Responding by Cutting Spending and Hiring

Higher prices are only one possible response to tariffs. CFIB’s survey found that 32% of businesses had reduced or were considering reducing purchases and imports affected by the duties. Another 31% had switched or were considering switching suppliers or sourcing locations. Such adjustments may help companies avoid some expenses, but finding reliable alternatives takes time. Products must meet quality requirements, suppliers need sufficient capacity, and changing established purchasing arrangements can introduce new transportation and administrative costs.

The consequences also extend to employment and investment. Approximately 24% of respondents reported delaying or planning to delay hiring, while the same proportion reported postponing or cancelling investments. Another 15% identified potential reductions in employee hours, and 13% selected layoffs among actions taken or under consideration. These responses combine decisions already made with plans being contemplated; they are not counts of completed job losses. Even so, they show how tariff uncertainty can affect workers and local communities well before every additional cost appears in consumer prices.

Financial Survival Is Becoming a Concern for Vulnerable Businesses

For some companies, the issue extends beyond whether customers will accept higher prices. CFIB found that 18% of exporters negatively affected by tariffs and 11% of importers affected by Canadian countermeasures said they could remain financially viable for no more than three months without additional support if current conditions persisted. These were projections from affected businesses, not confirmed closures. Still, they point to the possibility that prolonged trade restrictions could create immediate cash-flow problems for firms with limited financial reserves.

Among respondents able to estimate a significant financial impact, CFIB reported a median monthly cost or loss of C$65,000. That calculation was based on 110 responses and included potential lost revenues, higher costs and reduced profits. It should not be interpreted as the typical loss for every Canadian small business. Indeed, 72% of businesses answering the financial-impact question said it was too early to estimate the consequences. For a smaller operation, however, even a much lower monthly loss could force difficult decisions about staffing, supplier payments or whether to continue operating.

Businesses Are Asking Ottawa for Relief as the Dispute Continues

The CFIB survey also reveals what affected businesses want governments to do. Among exporters and importers harmed by the tariffs, approximately 83% considered government refunds of tariff payments helpful. A reduced small-business corporate tax rate received support from 82%, while 77% viewed direct cash grants favourably. CFIB has called for a dedicated tariff-relief program, faster decisions on exemptions and a reduction in the federal small-business tax rate from 9% to 6%. Those proposals reflect the organization’s advocacy priorities, not measures Ottawa has necessarily adopted.

The federal government announced a C$7.5 billion package of new and expanded support measures in August, including C$1.5 billion in additional regional tariff-response funding and a C$500 million liquidity stream through the Business Development Bank of Canada. Eligibility requirements and repayment obligations mean those programs are not automatic reimbursement for every affected company. With trade negotiations unresolved, businesses must continue balancing competitive prices against their ability to remain financially healthy. For consumers, the central uncertainty is how much of the economic burden companies can absorb before more of it appears on everyday bills.

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