Canadian business leaders see potential in the federal government's economic agenda but say progress will depend on how quickly promised measures are implemented as companies continue to contend with trade uncertainty and higher costs, according to a new KPMG Canada survey.
The survey found that just over half of business leaders expect federal economic measures to leave their companies better off over the next three years, while many are also seeking regulatory reform, tax changes and faster approvals for major projects to support investment and growth.
Businesses back agenda but want action
The National Business and Trade Outlook survey, conducted among 359 business owners and senior decision-makers, found 51 per cent expect their business to be "much better off" or "somewhat better off" as a result of the federal government's economic measures over the next three years. Another 31 per cent expect no material impact, while 15 per cent anticipate being somewhat worse off or worse off.
More than half of respondents, or 55 per cent, said the federal government is making progress in strengthening support for Canadian businesses. At the same time, respondents indicated they want the government's commitments to move more quickly from policy announcements to implementation.
Lachlan Wolfers
"As the U.S. ratchets up trade pressure on Canada, many Canadian businesses are taking a measured approach and want to wait to see how the latest U.S. tariffs will shake out before reacting," says Lachlan Wolfers, National Leader, KPMG Law. "Our survey shows business leaders want governments to stay focused on the actions that are within Canada's control to build economic resilience. They want government to work with them to quickly deliver on the federal economic agenda, improve tax competitiveness, reduce red tape and diversify trade."
The survey was conducted between June 25 and July 13, before the latest U.S. threat to impose a 50 per cent tariff on certain Canadian exports and the announcement of a new 10 per cent "forced labour" tariff, but KPMG said the findings reflect business sentiment during a period of continued trade uncertainty.
Regulatory reform tops wish list
When asked to identify priorities for strengthening the Canadian economy, respondents most frequently pointed to reducing red tape and accelerating regulatory reform, cited by 50 per cent. The same proportion supported fast-tracking a new West Coast oil pipeline. Accelerating major infrastructure spending followed at 47 per cent, while 43 per cent identified tax reform, including corporate taxes and investment incentives, as a priority.
Investment tied to policy support
The survey also found that 47 per cent of respondents are confident their companies could increase investment in Canada if supported through Buy Canadian procurement policies, government incentives and new financing.
"Canada has the right foundations for success in attracting global investment dollars, but now it needs the right policy setting to make this known to the world," adds Wolfers.
Trade strategy remains a priority
Trade negotiations with the United States remain a key concern for business leaders.
The survey found that 69 per cent believe Canada should take a firm negotiating position during Canada-United States-Mexico Agreement discussions and use all available leverage. Meanwhile, 65 per cent agreed Canada should adopt a more transactional and dispassionate approach to negotiations with the United States as businesses adjust to what they view as a changing bilateral relationship.
Joy Nott
Joy Nott
"Business leaders want Canada to continue to defend its position at the CUSMA negotiating table and reduce tariff exposure," says Joy Nott, Partner, Trade and Customs. "At the same time, there is a recognition of a fundamental reset in the trade relationship and the risks that entails. Nearly two thirds agree that Canada should approach negotiations with greater pragmatism, consistent with a more transactional Canada-U.S. relationship."
Export diversification gains momentum
The survey also suggests businesses are pursuing broader export opportunities while maintaining their presence in the U.S. market.
One-third of respondents said they plan to expand into new international markets within the next one to three years, while 26 per cent said they already export and are exploring additional markets where Canada has trade agreements.
Among companies reporting increased exports outside the United States during the past year, the European Union, the United Kingdom and Mexico were the most frequently cited destinations. Those markets also ranked as the leading targets for future export growth over the next one to three years.
"Our survey indicates Canadian businesses are taking trade diversification seriously, and official data indicate that shift is already underway, driven by demand for commodities. The U.S. still accounts for the bulk of trade in both goods and services, but it's not a surprise that more exporters plan to pursue other markets. This is diversification, not decoupling. Canadian businesses remain committed to the U.S. market while building resilience and reducing risk through broader global trade relationships," says Ali Jaffery, Partner and Chief Economist, KPMG Canada.
Tariffs continue to affect pricing
Tariffs continue to affect business operations, according to the survey.
Two-thirds of respondents said they have increased prices to reflect some or all tariff-related costs. Of those, 35 per cent said they had passed along some tariff costs, while 31 per cent said they had fully adjusted prices. Thirty-nine per cent reported making no price changes because of tariff pressures.
Regulation remains a key concern
Regulation also emerged as a significant issue for respondents.
Sixty-seven per cent said regulatory compliance requirements at all levels of government have created institutional gridlock that delays projects and discourages investment. About 65 per cent said over-regulation and higher taxes make it more difficult for businesses to grow and remain in Canada.
At the same time, 51 per cent agreed that regulatory compliance represents an important trade-off to protect health, safety, the environment and the duty to consult with Indigenous Peoples.
"Businesses accept the need for appropriate safeguards, but want faster, more predictable processes that accelerate project delivery and enable investment and scaling decisions," says Wolfers.
About the survey
The online survey was conducted from June 25 to July 13 among 359 business owners and senior decision-makers at Canadian businesses with annual gross revenue exceeding $10 million. Respondents were recruited through the Angus Reid Forum, with nearly three-quarters identifying as exporters and 79 per cent saying their goods and services comply with CUSMA.