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Special Report

Canada Business Outlook Research Brief

January 2025

Business Sentiment Bottomed Out But Could
Turn Negative if Tariff Threats Materialize

Falling interest rates improved sentiment. Business confidence climbed in the final quarter of 2024, driven by better future sales expectations as well as reduced cost and price pressures. This positive outlook was primarily supported by easing financial conditions and the anticipation of further rate reductions. However, businesses also expressed concerns about the potential impact of the new U.S. administration. A significant share of surveyed firms anticipated rising input costs and declining export sales. Since the survey was conducted between Nov. 7 and Nov. 27 – with the announcement of a potential 25 per cent tariff on all U.S. imports from Canada on Nov. 25 – it is possible the survey did not fully capture the impact of trade tensions. Depending on the evolution of Canada–U.S. relations, business sentiment could worsen again in the first quarter of 2025.

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