More than a quarter of Canadian businesses say they passed tariff costs on to customers

More than one in four Canadian businesses say they passed tariff-related cost increases on to their customers over the past year, and almost a third expect to do so again in the next twelve months, according to the third-quarter Canadian Survey on Business Conditions released by Statistics Canada on August 31.

The survey was conducted from July 2 to August 6, 2026, before the latest round of 50% U.S. tariffs took effect on August 22. It is also the last edition of the survey: Statistics Canada said this will be the final iteration of a quarterly questionnaire it has run since 2020.

The numbers

• 27.4% of businesses reported passing tariff-related cost increases on to customers in the 12 months before the survey; 37.7% said they passed on none, and 34.9% had no tariff-related cost increases at all.
• 30.4% said they were very or somewhat likely to pass tariff costs on over the next 12 months, while 36.3% did not expect to pass on any.
• 32.2% expect U.S. tariffs to hurt their business over the next year, rising to 49.7% in manufacturing, 47.3% in transportation and warehousing and 45.1% in wholesale trade.
• 59.8% expect cost-related obstacles over the next three months, down from 64.3% in the second quarter. Inflation remains the most commonly cited obstacle, at 41.6%.
• 20.6% of businesses expect to raise their selling prices over the next three months, led by accommodation and food services (34.6%), wholesale (29.6%) and retail (27.8%).

Context: inflation already back at 3%

The survey lands at a sensitive moment for prices. Statistics Canada noted that consumer inflation rose 3.0% year over year in July, after 2.8% in June. Raw material prices paid by manufacturers were 18.1% higher than a year earlier in July, even after a 2.2% monthly decline.

At the same time, the labour market is not adding much wage pressure: average hourly wages rose 2.8% year over year in July, down from 3.3% in June. That suggests much of the current price pressure is coming from inputs and trade costs rather than from paycheques.

Not all gloom

Business sentiment held up better than the tariff numbers might suggest. 72.6% of firms said they were very or somewhat optimistic about the next 12 months, compared with 66.8% in the second quarter and 72.3% in the first. Nearly half (46.9%) expect U.S. tariffs to have no impact on their business.

Expectations for sales were softer, however: only 14.5% of businesses expect sales to rise over the next three months, down from 19.4% in the prior quarter. The survey also found 25.2% of firms plan to use artificial intelligence over the next year, up from 14.5% a year earlier.

The main caveat is timing. Because responses were collected before the new U.S. tariffs and Canada's counter-measures, the share of firms planning price increases could be understated.

What it means for Canadian households

The survey is a reminder that tariffs are not only paid at the border; a meaningful share ends up in shelf prices. Restaurants, retailers and wholesalers are the sectors most likely to raise prices in the coming months, which is where household budgets tend to feel it first.

For households, the practical response is the usual one: review recurring spending, build a cushion for higher grocery and dining bills, and keep cash savings in accounts that pay a rate close to inflation. For investors, persistent cost pass-through is one of the factors the Bank of Canada watches when deciding whether rates can fall further. This is general information, not personalized advice.

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