Canadian small businesses face pressure from tariffs and inflation

Small businesses in British Columbia and across Canada are facing significant economic pressure due to rising costs, inflation, and new U.S. tariffs. According to the 2026 Canadian Small Business Report by Merchant Growth, 39 per cent of B.C. small business owners reported that their business is performing worse than it was during the same period in 2025.

Key drivers of this decline include weak customer spending (47 per cent), inflation or rising input costs (46 per cent), and increased fuel and energy expenses (32 per cent). Additionally, 71 per cent of B.C. owners surveyed stated that Canada-U.S. trade tensions have impacted their operations, primarily through higher costs for goods and supplies.

To manage these pressures, some businesses are raising prices, while others are absorbing costs to avoid losing customers. Financial strain has also led some owners to use personal credit or reduce their own salaries to maintain operations. On a national scale, businesses are also contending with volatile oil prices and the need to scale operations to improve productivity and resilience against external shocks.