Businesses downbeat but less worried about worst-case tariff scenario, Bank of Canada surveys find
The quarterly pulse checks, conducted in late April and May, captured the sour mood across Canada as Mr. Trump rolled out waves of tariffs through the spring and early summer.
Canadian companies said they're curtailing investment and hiring, and eating higher tariff-related costs because of weak consumer demand. Consumers said they are worried about their jobs and are delaying big purchases.
Tariffs are likely here to stay. What now, for Canada?
At the same time, the surveys found a sense of relief that U.S. tariffs have not bitten as hard as many feared earlier in the year when Mr. Trump was threatening across-the-board tariffs, without the exemptions that were later introduced.
'Fewer businesses are considering extremely negative scenarios in their planning,' the Bank of Canada said.
This hint of optimism reinforces expectations that the central bank will hold interest rates steady for the third-consecutive time when it meets next week.
After a string of better-than-expected economic data in recent weeks, financial markets are pricing a nearly 90-per-cent chance that the bank will keep its policy rate at 2.75 per cent next Wednesday, according to LSEG Data & Analytics.
What happens to monetary policy going forward depends a lot on how the trade war unfolds – both the outcome of Ottawa's trade negotiations with Washington, and how tariffs end up feeding through Canada's economy and influencing business pricing decisions and consumer behaviour.
Given the rapidly changing trade environment, the two Bank of Canada surveys are already dated. Since May, Mr. Trump has doubled tariffs on steel and aluminum to 50 per cent and threatened to increase tariffs on goods that don't meet free-trade-agreement rules to 35 per cent from 25 per cent. Last week, Prime Minister Mark Carney acknowledged that U.S. tariffs probably aren't going to zero, even if Ottawa can secure some reprieve.
That said, the surveys highlight several dynamics that could inform where interest rates go from here.
So far, U.S. tariffs and Canadian countertariffs haven't had a major impact on Consumer Price Index inflation, which came in at 1.9 per cent in June – below the central bank's 2-per-cent target.
The business survey suggested that companies are having trouble raising prices. Around half of the respondents said they're facing cost pressures related to tariffs and changes to their supply chains. However, 'competitive pressures and the current weakness in demand are limiting firms' ability to pass on these costs to customers,' the Bank of Canada said.
'As a result, many businesses expect their selling prices to increase over the coming year at a similar rate as they did over the past year. Because customers are sensitive to price increases, many firms are absorbing a portion of these increased costs, compressing their profit margins in an effort to preserve market share,' the bank said.
Quebec Premier says any new trade deal with the U.S. needs to have specific time frame
Having spiked dramatically in the first quarter, business and consumer expectations about future inflation remain elevated, although they did level off somewhat in the second quarter.
'Worries about tariff passthrough and inflation expectations were the reasons that the Bank of Canada held rates back in June, but those look less concerning in these surveys,' Royce Mendes, head of macro strategy at Desjardins, wrote in a note to clients.
'While central bankers probably won't ease monetary policy next week, there is ample scope for them to resume their cutting cycle later in the year should the economy continue to stagnate,' he wrote.
Both Bank of Canada surveys had notes of pessimism and optimism. The share of companies planning for a recession declined to 28 per cent from 32 per cent in the first quarter, and the number of companies that expected higher tariff-related costs dropped to one-third from two-thirds.
That said, more companies reported that leading indicators, such as order books and sales inquiries, have deteriorated, and hiring and investment intentions remain weak.
The consumer survey found that concerns about job security have eased somewhat since the first quarter. But fears of job losses remain elevated, and consumers are becoming increasingly cautious about spending on non-discretionary items.
Bradley Saunders, North America economist at Capital Economics, said in a note to clients that the surveys may appear overly downbeat given when they were conducted.
'Bleak sales and spending intentions captured by the Bank of Canada's second-quarter business and consumer surveys are consistent with a sharp downturn in GDP growth,' he said.
'However, the surveys were carried out at a time of peak tariff uncertainty. Since then, the timelier monthly business and consumer surveys generally suggest that sentiment has improved as tariff escalation threats have receded.'
Hashtags

Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles


Cision Canada
29 minutes ago
- Cision Canada
Daymak's Final Ride - Assets of Canada's EV Pioneer Up For Auction
TORONTO, July 30, 2025 /CNW/ - Danbury Global Ltd. & A.D. Hennick & Associates Inc., leaders in business liquidation and asset recovery, announce an upcoming public auction of the remaining assets of Daymak Inc., the Canadian-based electric vehicle manufacturer known for its innovative line of eBikes, scooters, ATVs, and personal mobility scooters. Founded in 2002 and headquartered in Toronto, Daymak grew to become one of Canada's most recognized names in personal electric transportation. With a product lineup ranging from high-performance electric ATVs to mobility scooters and eBikes, Daymak carved out a niche by combining accessible green technology with sleek design and consumer-friendly features. Daymak's products were sold through a network of dealers across Canada and internationally, and the company gained media attention for futuristic innovations, including solar-powered charging, and conceptual high-speed EV prototypes. Its popular models — such as the Daymak Boomerbuggy, Beast ATV, Arrow eScooter, and Paris eBike — were embraced by urban commuters, seniors, students, and outdoor enthusiasts alike. However, despite its strong brand and history of innovation, Daymak faced mounting financial challenges and was ultimately placed into receivership on May 23, 2025. Danbury Global and A.D. Hennick & Associates have since been appointed to conduct a public auction of company's EV inventory and parts. "This auction marks the end of an era for one of Canada's most creative e-mobility companies," said Alex Hennick President of A.D. Hennick & Associates Inc. "With over 350 eBikes, plus scooters, ATVs, and thousands of EV parts available, this auction presents a rare opportunity to acquire inventory at substantial savings — New-in-box eBikes valued over $2,000 are starting at just $50 — all selling with no minimums or reserves." said Jonathan Ordon, CEO of Danbury Global. The Daymak inventory will be sold as part of a major two-day auction event, which also includes a large quantity of brand-new water sports equipment. Bidders will have access to stand-up paddleboards, water bikes, kayaks, and more, offering exceptional opportunities across two distinct product categories. Additional information can be found at:


Cision Canada
29 minutes ago
- Cision Canada
Canada Drives Innovative Technology to Reduce Emissions From Commercial Transportation Fleets Français
TORONTO, July 30, 2025 /CNW/ - Canada is accelerating innovation in emerging clean technologies that will make it easier for businesses to transition to low-carbon choices and helping Canada's largest city modernize its fleets. Today, the Honourable Evan Solomon, Minister of Artificial Intelligence and Digital Innovation, on behalf of the Honourable Tim Hodgson, Minister of Energy and Natural Resources, announced more than $21 million for nine research, development and demonstration projects to reduce greenhouse gas emissions from Canada's transportation sector. The cutting-edge technology in these projects aim to save money and reduce greenhouse gas emissions for businesses by improving system efficiency, making it easier to switch to zero-emissions vehicles and addressing technical and market barriers for medium- to heavy-duty vehicles that have low or zero emissions. These projects are funded through Natural Resources Canada's Energy Innovation Program On-road Transportation Decarbonization call for proposals, which targets the most impactful technologies to maximize economic and environmental outcomes. Minister Solomon also announced a $4.97-million investment for the City of Toronto to transition 60 of its waste-collection vehicles to operate with a hybrid electric-compressed natural gas system. This innovative conversion drastically reduces emissions, fuel consumption and operational noise without disrupting the vehicle's performance. This project is funded under the Green Freight Program fleet modernization stream, which funds repowering existing vehicles, purchasing low-carbon alternative-fuel vehicles and implementing logistical best practices that make the transportation industry more efficient. Quotes "We are taking bold steps to make Canada an energy superpower. Through these projects, Canadian innovators are creating and commercializing the emerging technologies we need for clean, sustainable transportation for our future. We're investing in Canadian ideas to accelerate emissions reductions from medium- and heavy-duty vehicles, which strengthens our supply chains and energy independence. We're also delivering practical, on-the-ground solutions as we drive the transition to zero-emissions fleets in Canada's largest city, Toronto." The Honourable Tim Hodgson Minister of Energy and Natural Resources "With today's announcement, we're not just investing in technology — we're powering a new era of smarter, more-sustainable transportation for Toronto. Sixty municipal waste trucks are becoming testaments to innovation: quieter on our streets, lighter on fuel, lower on emissions. We're enabling homegrown breakthroughs — right here in the GTA and southwestern Ontario — that are driving electric vehicle performance, safety and reliability in uniquely Canadian conditions. From bustling city routes to subzero winters, this is how we move our cities, and our country, forward." The Honourable Evan Solomon Minister of Artificial Intelligence and Digital Innovation "It's an exciting time to take advantage of technologies that can reduce emissions and bring our fleet of vehicles into the future. We thank the Government of Canada for its partnership as Toronto continues to find ways to make our city greener, while maximizing the economic benefits of this type of technology." Her Worship Olivia Chow, Mayor of the City of Toronto Quick Facts The Energy Innovation Program (EIP) advances clean energy technologies that will help Canada maintain a competitive, reliable and affordable energy system while transitioning to a low-carbon economy. Transportation accounts for about a quarter of Canada's greenhouse gas emissions. The Green Freight Program helps fleets reduce fuel costs and emissions through vehicle repowering, the purchase of low-carbon alternative fuel vehicles and the implementation of logistical best practices to improve fuel efficiency. Energy Innovation Program – On-road Transportation Decarbonization Call for Proposals Green Freight Program Funding is available for fleet energy assessments and truck/trailer equipment retrofits Follow Natural Resources Canada on LinkedIn. SOURCE Natural Resources Canada


CTV News
29 minutes ago
- CTV News
Capital Power reports $132 million Q2 loss after closing major acquisition
Hydro towers are seen in Montreal, Wednesday, Aug. 30, 2023. THE CANADIAN PRESS/Christinne Muschi EDMONTON — Capital Power Corp. says it swung to a loss in the second quarter compared with a profit last year in a period that saw it close its largest-ever acquisition. The Edmonton-based electricity producer says its net loss attributable to shareholders was $132 million during the quarter ended June 30, or 92 cents per diluted share. That compared with a profit of $75 million, or 51 cents per share in the same quarter last year. The swing to a loss came as revenue also dropped to $441 million, down from $774 million last year. In the quarter, the company completed its $3 billion acquisition of two power facilities in the U.S. that it says adds to its flexible power generation. The company also revised its guidance for the year, raising its expected capital expenditures, adjusted earnings before certain deductions, and adjusted funds from operations. This report by The Canadian Press was first published July 30, 2025.