Study: 52% of Tariff-Impacted Small Businesses Are Performing Worse, While Most Haven’t Felt the Buy Canadian Boost

Many Canadian small business owners say they’re an afterthought in trade negotiations, according to Merchant Growth's 2026 Small Business Report

VANCOUVER, British Columbia--(BUSINESS WIRE)--More than a year into tariffs and cross-border trade disruptions, many Canadian small businesses are not seeing any relief through government support and the Buy Canadian movement, according to the 2026 Canadian Small Business Report by Merchant Growth, Canada's online financing and growth solution for small businesses.

Nearly two in three (65%) small business owners say U.S.-Canada trade tensions have affected their business in 2026. Among those owners, more than half (52%) say their business is performing worse than it was at this point last year.

Many owners also feel shut out of the national response, with over one in three (37%) saying they’re not part of the conversation at all. Meanwhile, another 39% say large exporters, manufacturers, and political considerations come first.

Despite the series of tariff relief programs that federal and provincial governments have introduced, 68% of small business owners say they have seen no noticeable impact from these initiatives.

Canadian consumers say they have been choosing Canadian, but small business owners haven’t felt the boost. Over half (56%) of Canadian consumers have shopped more from Canadian small businesses in the past 12 months than in previous years. However, two in three (67%) small business owners say the Buy Canadian movement hasn't had a noticeable impact on their business.

As economic pressures stack up, some owners are putting their own finances on the line to keep their businesses afloat. More than one in five (22%) small business owners have used personal credit, such as credit cards, home equity lines of credit or personal loans, to fund their business.

"You don’t have to export anything to feel this trade war. It lands on a supplier’s invoice, or with a customer who decides to hold off, and a lot of owners can't pass that cost along," said David Gens, Founder and CEO of Merchant Growth. "Canadians have shown up for local businesses, and that matters, but it hasn't been enough to cover what owners are paying for goods and fuel. With tariffs, fuel prices, and slower spending all hitting at the same time, small businesses need financing that’s fast and flexible enough to keep up, so one hard quarter doesn't decide whether they stay open."

The 2026 Canadian Small Business report also found that:

How have U.S.-Canada trade tensions impacted small businesses?

The U.S.-Canada trade tensions are directly impacting Canadian small businesses’ bottom lines. As a result of the trade disruptions:

• 38% saw an increased cost of goods or supplies
• 27% faced lower revenue
• 26% experienced lower customer demand
• 23% absorbed higher costs because they couldn’t raise prices
• 13% delayed or cancelled a planned purchase or investment
• 12% faced a higher cost of equipment or machinery purchased from the U.S.
• 12% saw cancellation or pause of contracts or orders
• 6% lost a U.S. customer or contract outright

In response to the U.S.-Canada trade tensions, small businesses are adjusting how they operate with U.S. partners and customers:

• 13% stopped working with U.S. suppliers or partners
• 9% found new suppliers outside the U.S.
• 8% stopped selling to U.S. customers
• Looking ahead, 11% of small business owners plan to seek new customers or suppliers outside the U.S. over the next six months.

Is the Buy Canadian movement helping small businesses?

• The share of Canadian consumers who have shopped much more from Canadian small businesses has gone up from 20% in 2025 to 24% in 2026.
• Canadian consumers’ top motivators for buying from Canadian small businesses are supporting the local economy (75%), supporting Canadian jobs (69%), and U.S. tariffs (55%).
• Canadian consumers’ top barriers to buying from Canadian small businesses are prices (52%), product availability (31%), clarity that a product is Canadian (23%), and store locations (23%).
• That support has yet to translate into a meaningful change for most owners. Only about one in four (24%) small business owners say the Buy Canadian movement has had a positive impact on their business so far in 2026, while 67% have seen no noticeable impact.

Canadian small business owners are raising prices and pulling back on growth plans

This year, the three biggest pressures on Canadian owners’ businesses are inflation or rising input costs (44%), weak customer spending (38%), rising fuel and energy costs (36%), and trade uncertainty (12%).

In response to these pressures, Canadian small business owners are shifting their approach to pricing and operations. However, some are trading off their growth plans.

• 22% increased prices for customers
• 15% delayed or cancelled a planned investment to expand the business
• 13% diversified their products or services
• 11% reduced staff or hours
• 10% paused hiring
• 9% adopted new technology (AI, automation systems, etc.)

Looking ahead, 41% of Canadian small businesses plan to hold steady with their business plans. Meanwhile, some are planning to make further adjustments by cutting costs and finding ways to improve margins. Over the next six months:

• 22% plan to raise prices for customers
• 14% plan to wind down their business
• 11% plan to delay or cancel a planned investment
• 9% plan to reduce staff or hours
• 8% plan to invest in equipment or technology

About Merchant Growth

Merchant Growth is a leading Canadian financial technology company that specializes in small business financing. Founded in 2009, Merchant Growth has since supported over 15,000 Canadian businesses with over $1.5 billion in growth financing. Using an innovative approach that includes the latest technology, complete transparency, and thoughtful customer care, Merchant Growth is committed to helping make business financing convenient, easy to understand, and accessible.

To learn more, visit: www.merchantgrowth.com.

Methodologies

• Consumer survey: These findings are from a survey conducted by Merchant Growth from August 31 - September 2, 2026, among a representative sample of 1500 online adult Canadians who are members of the Angus Reid Forum. The survey was conducted in English and French. For comparison purposes only, a probability sample of this size would carry a margin of error of +/-2.53 percentage points, 19 times out of 20.
• Small business survey: These findings are from a survey conducted by Merchant Growth from September 1 - September 8, 2026, among a representative sample of 500 small business owners in Canada who are members of the Angus Reid Forum. The survey was conducted in English and French. For comparison purposes only, a probability sample of this size would carry a margin of error of +/- 4.3 percentage points, 19 times out of 20.