Canadian business confidence rebounds as tariff pressure persists

Canadian business and economic confidence improved sharply in late August, reaching the strongest economic reading in more than five years even as U.S. tariff threats continued. The new survey suggests the impact of Trump-era trade pressure has been narrower than expected, with manufacturing feeling the most strain.

Why it matters: - Canadian businesses are showing more resilience than expected during a period of tense U.S.-Canada trade relations. - Stronger confidence can shape hiring, investment and expansion plans, especially if businesses believe the outlook has stabilized. - The improvement also suggests tariff pain may be concentrated in specific sectors rather than across the broader economy.

What happened: - Modus Research’s latest Business Monitor found Canadian economic confidence at its highest level in more than five years. - Business confidence also improved, while the economic outlook remained negative on balance. - The survey was conducted Aug. 12-26, 2026, with 520 Canadian managers and executives. - The release says the Business Monitor is Canada’s only B2B omnibus and is powered by the Modus Business Panel. - Modus published the full report online: More information

The details: - Negative ratings of the Canadian economy fell from 62% to 40%. - Positive ratings rose enough to push economic confidence into neutral territory. - The release says economic confidence is now better than at any point since before Trump’s re-election. - Economic outlook improved more than twofold after Trump was sworn into office, though the balance remains negative at 45% negative and 33% positive. - Business confidence rose gradually after Trump’s inauguration, moving from -3 to +13. - The survey’s margin of error was plus or minus 4.3% at a 95% confidence interval. - Modus said the panel uses probability-based telephone sampling and was weighted by region and enterprise size using Statistics Canada data.

Between the lines: - The rebound appears stronger than what quarterly GDP alone would explain. - The release points to narrow tariff effects, with manufacturing taking the hardest hit. - Canadian businesses are also increasingly focused on economic sovereignty and diversifying trade away from the U.S. - The improvement in confidence came before the latest Statistics Canada update, which the release says supports the survey results.

What's next: - Modus said the situation will need continued monitoring in the coming months as U.S. trade policy remains unpredictable. - The release suggests future confidence readings could shift if tariffs expand or if trade tensions ease. - The company also said the latest survey is one part of an ongoing regular tracking series.

The bottom line: - Canadian business sentiment is improving even under tariff pressure, but the recovery is uneven and still vulnerable to U.S. policy moves.