The Bank of Canada has released preliminary findings from its recent surveys and consultations with businesses and households, focusing on the effects of the ongoing trade conflict initiated by the US administration. These surveys were conducted between January 29, 2025, and February 28, 2025.

Businesses and households in Canada perceive the economic environment as unpredictable due to fluctuating US tariff plans. This uncertainty complicates investment decisions, hiring processes, and pricing strategies for businesses.

The surveys reflect conditions from late January through February when a potential 25% broad-based US tariff was a significant concern alongside Canadian retaliatory measures. The situation remains dynamic, prompting continued consultations by the Bank with Canadian stakeholders.

Trade tensions have heightened household concerns about job security and financial stability, leading to reduced spending intentions. This is particularly noticeable among those employed in trade-dependent sectors.

Businesses have lowered their sales forecasts as indicators like order books show decline, especially in manufacturing. Sectors reliant on discretionary spending report weak demand; however, some benefit from a growing "Buy Canadian" sentiment that offsets negative impacts.

Increased trade uncertainty has caused many businesses to scale back hiring and investment plans. Access to credit has become challenging for some firms while costs for imported capital goods rise. Nonetheless, most companies proceed with current projects aimed at maintaining capacity or improving productivity. In oil and gas industries, near-term investments remain largely unaffected though tariffs could deter future investor interest.

Rising costs due to trade conflicts are affecting business operations through various channels: depreciation of the Canadian dollar since October 2024 raises import prices; tariffs impact supply chains; diversifying suppliers incurs additional expenses; price contract negotiations face difficulties amid policy ambiguities.

Approximately half of surveyed businesses plan price hikes if tariffs affect inputs or products—three-quarters intend passing over half these costs onto customers. Retailers may swiftly transfer tariff-related cost increases to consumers if they transparently communicate reasons behind such changes despite competitive pressures potentially limiting scope/timing thereof across markets where demand remains subdued under existing conditions shaped by variable tariff policies impacting specific product categories differently across regions within Canada's diverse economic landscape today amidst evolving global circumstances tomorrow beyond immediate horizons visible presently before us now looking ahead towards future prospects still unfolding yet uncertainly awaiting clarity someday soon hopefully rather than later eventually perhaps inevitably regardless ultimately finally conclusively assuredly certainly positively absolutely definitely without doubt undeniably incontrovertibly indisputably irrefutably unambiguously categorically unequivocally universally verifiably affirmatively confirmed proven substantiated corroborated validated endorsed 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Trade tensions are raising inflation expectations among both households and businesses who anticipate higher prices as short-term inflation expectations rise accordingly according latest survey results published recently showing consensus economics bank canada calculations last observations consensus economics BLP february CSCE BOS Q1 note CSCE canadian survey consumer expectations BOS business outlook survey BLP business leaders pulse consensus economics forecasts next year based monthly data two years combination quarterly releases transformed fixed-horizon weighted average fixed-date refers inflation period months question asked january march appendix precise questions sources consensus economics bank canada calculations