Nearly two-thirds of Canadian businesses want the government to take action on minimizing barriers to internal trade between provinces to boost the country’s productivity, a new report suggests.
Eighty-two percent of the business leaders surveyed said the elimination of interprovincial trade barriers would improve their company’s efficiency and productivity. The poll was conducted between May 9 and May 20.
Business leaders identified a comprehensive tax review as a top priority for improving competitiveness, with 58 percent in favour while 56 percent said the government should streamline processes and accelerate both major infrastructure projects and resource allocation.
The KPMG report also indicated that 76 percent of respondents are preparing for the worst and are taking measures to prepare themselves for a recession in Canada, due to persistent trade uncertainty amid U.S. tariffs.
The United States has imposed three sets of tariffs on Canada, some accompanied by free trade exemptions. Canada has retaliated but has similarly applied exemptions and introduced remissions for certain economic sectors.
Sixty-eight percent of business leaders polled say they are investing in marketing and establishing relationships in new markets. Even if the trade uncertainty with the United States is resolved, 90 percent of respondents “will still diversify to other markets,” the survey indicated.
KPMG Canadian Managing Partner Monika Manza said businesses need the government to provide more certainty amid the ongoing Canada-U.S. trade dispute.
Toll of Trade Dispute
Seventy-seven percent of survey respondents described the Buy Canada movement as helpful in boosting their sales, and 84 percent also “hope the Buy Canada movement doesn’t fizzle out” because they need it to offset the ongoing trade uncertainty with the United States.“They want to tap into the new nationalism and expand their market share across Canada,” Manza said. “But that requires the will and leadership of governments across the country to break down artificial barriers to domestic trade.”
As many as 75 percent of business leaders no longer consider the U.S. a dependable market, the survey found, noting that 79 percent are expanding their export markets to lessen their reliance on the United States.
Fifty-four percent of businesses reported they have already decreased their investment, research and development expenditures, and/or capital spending for the upcoming 12 months due to ongoing trade tensions and 57 percent said they plan to reduce such investments in the future.
Fifty-eight percent of businesses polled have lowered their sales outlook for the next 12 months, 52 percent have increased prices to customers, and 63 percent “will increase” prices in the near future.
The trade uncertainty has also impacted staffing levels with 38 percent of businesses saying they have already laid off employees and 49 percent imposing a hiring freeze. An additional 46 percent said they are considering laying off employees, implementing a hiring freeze, or both.
The current business climate has made it difficult for companies to carry on with business as usual, Manza said.
“While it will take time for governments to tackle the priorities most important to the business community, many companies don’t have the luxury of time and are already facing a revenue crunch,” she said. “Already, more than half have cut their profit and sales outlooks, which will make it all the more difficult for them to reinvest in their companies at a time when we need every business to fire on all cylinders and maximize productivity.”
