Canadian small business owners are quickly losing faith in the United States as a trading partner and a growing number are doing something about it, a new survey suggests.

Almost half of small businesses said they don’t consider the U.S. a reliable trading partner, and a third have shifted to suppliers and markets within Canada.

For weeks, businesses in Canada have endured wave after wave of turmoil as U.S. President Donald Trump launched a trade war armed with tariffs.

“Businesses need more certainty, it’s simple as that,” said Simon Gaudreault, chief economist of the Canadian Federation of Independent Business (CFIB) which conducted the survey.  ”

“As one business owner told us, the unpredictability of the current situation is making surviving the pandemic look like a walk in the park.”

Trump’s latest move came yesterday when he slapped a 25-per-cent “permanent” tariff on all autos made outside of the United States, a move Canadian auto industry leaders say will devastate the sector.

On April 2, Trump’s so-called “deliverance day,” he plans to impose reciprocal tariffs on all trading partners. Ottawa has responded with retaliatory tariffs on about $60 billion worth of U.S. goods so far.

“As we gear up for the April 2 reciprocal tariffs, no one knows where the U.S.-Canada trade war is heading in the long term. For some businesses, making drastic changes is not feasible, but others are taking actions to offset the current impacts,” said Gaudreault.

A third of respondents in the CFIB survey said they intend to reduce efforts in the United States over the next six months and 27 per cent plan to increase their investment in Canada.

Businesses are also delaying or cancelling expansion plans and exploring international alternatives.

One such company is Odd Burger Corp., a vegan fast-food chain in London, Ont., which this week halted plans to expand into the United States.

“I think the attacks on our sovereignty and the comments coming from the U.S. about Canada not being a real country, and just the overall escalation of rhetoric against Canada makes it very difficult to invest the time and move forward with our plans,” co-founder and chief executive James McInnes told the London Free Press. 

Just weeks ago the company announced it was raising funds to open a manufacturing facility in the U.S., which would allow it to avoid Trump’s tariffs, but that project is now on hold.

Odd Burger now plans to use the funding to expand its Canadian operations, said McInnes.  “It will all be invested in Canada now.”

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Some economists are “materially” cutting their forecasts for Canada’s housing market after tariff uncertainty and winter storms slammed the brakes on sales early in the year.

TD Economics is now tracking a double-digit decline in home sales and single-digit drop in home prices for the first quarter.

“These outcomes are much weaker than our pre-Trump inauguration forecast made in December,” said TD economist Rishi Sondhi. “This much softer starting point has us led to materially mark down our 2025 annual average growth forecasts for Canadian home sales and prices.”

The economists don’t expect activity to continue as weak as it was early in the year but they predict “elevated uncertainty and a deteriorating jobs market will yield subdued sales and price growth for much of 2025.”

• Today’s Data: United States gross domestic product for fourth quarter, pending home sales
• Earnings: Lululemon Athletic Inc, Seabridge Gold Inc.

• Bank of Canada would have held interest rate at 3% in March, if not for tariff threats
  
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Today’s Posthaste was written by Pamela Heaven, with additional reporting from Financial Post staff, The Canadian Press and Bloomberg.

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