A new Canadian bank survey shows households and businesses hope that trade tensions with the US will lead to higher prices, lower job security, slower sales, and more cautious spending.
The Canadian central bank says the investigation was conducted between January 29th and February 28th, reflecting a widespread US tariff of 25% and the threat of Canadian retaliation measures.
“Companies and households consider the economic situation unpredictable,” the BOC wrote Wednesday.
“The planned scope and magnitude of US tariffs continues to change with the timing of their implementation. This uncertainty makes it difficult for businesses to make investment and employment decisions and set prices.”
Research shows that about half of companies plan to raise prices if customs duties are imposed on inputs or products. Approximately three-quarters of this group expects more than half of their tariff-related costs to customers.
At the same time, banks say that while companies have lowered sales outlook, “Canadian sentiment purchases” is blunting some of the negative effects of current trade tensions.
“We believe that most of the affected companies are small and medium-sized businesses,” CIBC Capital Markets analyst Ian de Verteuil wrote in a note to his client earlier this week.
For households, banks say trade tensions bring concerns about job security and financial health, reducing spending.
