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It has been more than a year since U.S. President Donald Trump announced  sweeping tariffs on Canadian goods.

Canada responded with its own retaliatory tariffs which led to a significant escalation in trade tensions, disrupting longstanding cross-border economic co-operation and prompting both countries to implement additional countermeasures and support programs for affected industries.

Since then, the ‘trade war’ has continued to expand to include tariffs on steel, aluminum, automobiles, and a range of consumer goods, with both Canada’s federal and provincial governments taking steps to mitigate the impact on businesses and workers.

This has left companies on both sides of the border scrambling to adapt to new supply chain realities, while ongoing negotiations and temporary exemptions have provided only limited relief amid continued uncertainty. 

Businesses remain optimistic

Despite the volatility of the situation, the Ontario Chamber of Commerce’s 10th annual Ontario Economic Report, released at the end of February, indicates that business confidence in the province is stalled but stable, and trade turbulence is reshaping business decisions, something Cambridge Chamber of Commerce President and CEO Greg Durocher says is not surprising.

“After going through a year of distress and turmoil over tariffs and trade, things have not seemed to get worse,” he says, referring to businesses’ confidence level. “What was interesting in the report was that the majority of Canadian businesses remain optimistic about themselves and relatively optimistic about the future but not about the politics of the future.”

The report’s findings were compiled from a survey conducted between Oct. 16 and Dec. 4, 2025, using Leger’s online panel and representatives from local chambers of commerce, boards of trade, and organizations from the OCC's broader network. Just over 1,600 respondents completed the survey, representing a cross-section of industries, regions, and types of organizations provincewide. 

Certainty required

The report found that while Ontario’s economy has shown strength, prosperity depends on lowering costs and risk for business, incentivizing investment, expanding to new markets, building infrastructure, and developing talent.

It also found that only 23% of businesses are confident in the Ontario economy, down slightly from last year’s 26%, but far stronger than during the pandemic and its inflation highs.

“It’s typical entrepreneurship, where the entrepreneur has much more confidence in themselves than they do about the regulatory bodies around them that enable them to do business,” says Greg. “However, we need to get to the point where there is some light at the end of tunnel, or some progress and stability. We talked about this during COVID. What business really depends and relies on is certainty, and the last thing that businesses have had in the last six years is certainty.”

Remarkable resilience

The report shows that in 2026, businesses are also slightly more confident in their own prospects than they were a year ago (52%, up from 49%). Confidence is lowest among small businesses (20%), and higher among mid-sized and large businesses (34 and 35% respectively).

“At a time of turbulence, Ontario’s economy is showing remarkable resilience – but that’s no guarantee of growth,” said Daniel Tisch, president, and CEO of the Ontario Chamber of Commerce, in a release. “It’s time to move from resilience to renovation of our economic foundations: a more attractive investment climate, diversified trading relationships, and additional supports to help businesses move from surviving to thriving.”

Greg says the outcome of the upcoming CUSMA (Canada-United States-Mexico Agreement) negotiations could provide a bit of the certainty they are seeking.

“Regardless of what that outcome may be, whether it’s good or bad, at least we should find some semblance of certainty and business will find its way because business has to survive,” he says.

Click here to read the full interactive report.

Key findings

• Business confidence sits at 23%, down 3% from a year ago; 52% are not confident in Ontario’s economic outlook, up 4%.
• Businesses are responding to U.S. trade and tariff policies by increasing prices (25%), diversifying suppliers (22%) and absorbing costs (20%).
• Only 19% of firms report increasing their business investment in 2025, and only 26% plan to increase their investment in 2026. Many firms are neither increasing nor decreasing investment, as high costs and trade uncertainty have prompted many to pause or scale back capital projects.
• Nearly half (49%) of businesses headquartered outside Ontario plan to expand here, more so than in the U.S. (45%), but also cite concerns about costs, political and economic stability, and talent gaps in key industries and regions.
• Business policy priorities reflect the need for near-term relief and longer-term certainty, including strengthening domestic demand (e.g., through reducing interprovincial trade barriers and buy local campaigns), targeting financial supports, simplifying tax incentives, and improving coordination between decision-makers.
• Ontario’s real gross domestic product (GDP) is projected to grow by 1.2% in 2026, following a subdued 1.4% in 2025, as the economy adjusts to U.S. tariff impacts and weaker economic conditions.
• Inflation is expected to remain within the 1-3% target range, supported by softer demand and slower growth, though global supply-side pressures may keep some business costs elevated.
• Ontario’s unemployment has stabilized but remains high at 7.6% heading into 2026, among the highest in Canada, as employment growth cools and population growth slows.
• Technology adoption is advancing, but unevenly. Just over half (52%) of businesses report moderate or extensive use of emerging technologies, including artificial intelligence (AI). Barriers cited include cost, skills gaps, and uncertainty around return on investment.
• Diversity, Equity Accessibility, and Inclusion (DEAI) actions are growing marginally: Almost half of firms (48%) now have diversity and inclusion strategies – up 2% from a year ago, and up 7% in the last two years.
• Workforce and mental health pressures continue to weigh on productivity, retention, investment readiness, and community safety, but only 49% offer mental health resources and supports.
• Trade uncertainty persists, even with the Canada‑U.S.-Mexico Agreement in place, but tariff volatility continues to disrupt pricing, supply chains, and long‑term planning. In this context, recent government efforts to leverage domestic demand are creating greater optimism.