Canadian Small Business Owners Hit Pause as Confidence Slides

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Canada's small business owners are in a wait-and-see mood, and the waiting keeps getting longer. The Canadian Federation of Independent Business (CFIB) reports that its long-term optimism index fell 10 points to 47.9 in September 2026, while its three-month outlook dropped by the same margin to 43.3. Readings below 50 mean more owners expect things to get worse than better, and confidence is now at its lowest since the first wave of U.S. tariffs in early 2025.

More cuts than hires

In the short term, 16% of owners plan to reduce staff and 13% plan to hire, leaving net staffing intentions at minus three. It is the second negative month in a row, after intentions were positive in six of the first seven months of the year. CFIB director of economics Andreea Bourgeois linked the decline to renewed tariff uncertainty and rising oil and gas prices. The backdrop: the U.S. imposed 50% tariffs on about $28 billion of Canadian goods in August, and Canada answered with $27.6 billion in counter-tariffs from September 8.

“It's no surprise small business owners are pressing pause on hiring, investment and expansion,” said Corinne Pohlmann, CFIB executive vice-president. Ryan Mallough, the federation's vice-president of legislative affairs, said owners are holding back decisions on hiring, expansion, new locations and new product lines until they get some clarity.

Would you start a business today?

A separate CFIB report paints an even gloomier picture for would-be entrepreneurs. Some 22% of small businesses describe their condition as weak or critical. Only 18% of owners would encourage someone to start a business today, while 50% would advise against it, mostly citing the high cost of doing business (88%) and economic uncertainty (86%). Not exactly a recruitment poster for founders. Business closures have also outpaced openings for six consecutive quarters, from early 2024 through mid-2025.

Ottawa has announced a $7.5 billion support package and extended tariff-related flexibility in its Work-Sharing program until March 31, 2028. CFIB wants more: a cut in the federal small business tax rate from 9% to 6% and a higher small business deduction threshold, from $500,000 to $700,000. The federation's chief economist said owners would mainly put any savings into their HR budgets, since the last thing they want is to lose hard-to-recruit talent.