Small business confidence rose to 58.3 points in July, finds the latest Monthly Business Barometer by the Canadian Federation of Independent Business (CFIB). The survey was conducted from July 7 to 13, before the latest U.S. tariffs were announced.
“Although confidence had started to improve, renewed trade uncertainty can quickly undermine progress. With President Trump’s latest executive orders to hit Canada with 50% tariffs in a month, business sentiment will likely drop in August. Between seesawing fuel prices and renewed trade tensions, it’s a major challenge for businesses to plan ahead,” said Simon Gaudreault, CFIB Chief Economist and Vice-President of Research. “The last thing we want is for small business confidence to take a hit like it did in March 2025 when it cratered to an all-time low after the first round of tariffs was announced.”
Measured on a scale between 0 and 100, an index above 50 means owners expecting their business’s performance to be stronger over the next three or 12 months outnumber those expecting weaker performance. An index level near 65 normally indicates that the economy is growing at its potential.
While overall optimism improved, confidence among manufacturing businesses continued to lag behind at 53.7 index points. Manufacturing sector’s confidence hasn’t recovered since 2023 and has been hit harder by tariffs than by either the 2008-09 recession or the pandemic. Where 45% of small businesses nationally reported shipping and receiving costs as a constraint in July, that figure hit 63% among manufacturers, more than double the 29% recorded in February 2026. Input product costs were squeezing 77% of manufacturers, almost twice the usual share for this sector, explained Canada’s largest association of small and medium-sized businesses with 103,000 members across every industry and region.
“This industry is in a very challenging spot. Optimism among manufacturing firms was showing timid signs of improvement, but still below its historical average and most likely would lose momentum going forward,” said Andreea Bourgeois, CFIB Director of Economics. “As some manufacturers are considering U.S. production, we need a more competitive fiscal environment here at home and policies that would encourage businesses to stay and invest in Canada.”
Fuel costs remained the top cost constraint affecting 60% of small firms across Canada, while shipping and receiving costs stayed elevated for 45% of businesses. Nearly four in ten (38%) firms reported struggling with capital equipment and technology costs, compared to a historical average of 23%, said the CFIB.
Provincial outlooks were mixed, while most sectors saw small changes in optimism. The future price increase indicator was easing, with small firms planning to increase prices by an average of 2.7% over the next few months, it said.
The share of businesses citing limited physical space as a factor restricting sales or production growth was trending down since November 2025, reaching 14% in July, it noted.
“It’s another indicator that small businesses were being careful with investment and expansion plans, as they were not sure about future demand,” Gaudreault added.
More from Retail Insider:
