Canada’s small business confidence plunges to record low

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Confidence among small businesses plummeted to an all-time low in March, with sentiment lower now than anytime during the pandemic, the 2008 financial crisis or in the aftermath of 9/11, according to the Canadian Federation of Independent Business (CFIB).

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The CFIB’s Business Barometer long-term index fell 24.8 points to 25 as confidence across all sectors fell.

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“Small business owners are feeling pessimistic about their business’s perspectives for the next few months or even beyond,” Simon Gaudreault, CFIB’s chief economist and vice-president of research, said in a release.

To recoup losses from Canada’s trade war with the United States, small businesses are planning to raise prices by an average of 3.7 per cent, cut wage increases and consider layoffs.

“It’s hard to make critical decisions for the long, medium or short term when so much can change within a matter of hours,” Gaudreault said. “No one knows when the tariff war will end, and businesses are worried the worst is yet to come.”

Product demand has also reached a new low, with 59 per cent of small businesses impacted by weak demand, which is more than the pandemic high of 53 per cent.

The agriculture sector arguably faces the biggest challenge. On top of U.S. tariffs, the sector is dealing with 100 per cent Chinese tariffs on canola oil, pork and seafood, which came into effect Thursday.

“Chinese tariffs are coming at the worst possible time given the ongoing uncertainty in our trading relationship with the United States,” Gaudreault said.

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Corinne Pohlmann, executive vice-president of advocacy at CFIB, said small businesses “need all the help they can get” to weather this storm.

“Now is the time to show strong support to small businesses,” she said.

The CFIB is calling for the federal government to make carbon tax rebates for small businesses tax free, increase the lifetime capital gains exemption and create support systems for those hurt by tariffs.

Two weeks ago, the federal government announced $6 billion in aid for businesses hurt by tariffs and $1 billion in financing for the agricultural sector.

In Ontario, Premier Doug Ford pledged to defer $10 billion in business taxes for six months and offer $3 billion in payroll tax relief.

Other provinces are offering relief as well. For example, Manitoba is also deferring provincial sales taxes and payroll taxes for three months, while New Brunswick is allocating $4 million to support its seafood industry, $5 million for small businesses and $40 million to help the long-term sustainability of its large exporters.

Quebec is offering funds to help businesses diversify away from the U.S. and provide loans up to $50 million for local export companies in the manufacturing and primary sectors, and Prince Edward Island has begun a financial relief program for affected businesses, offering up to $500,000 over six years.

• Email: bcousins@postmedia.com

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