New Merchant Growth data shows 65% of owners hit by U.S.-Canada trade tensions, with many funding operations from personal savings
One in five Canadian small business owners is drawing on personal credit to keep their operations afloat, as U.S.-Canada trade tensions continue to erode revenues and squeeze margins across the country, according to a new survey.
The Merchant Growth 2026 Small Business Report, based on surveys conducted between August 31 and September 8, 2026, among 500 small business owners and 1,500 adult Canadians through the Angus Reid Forum, found that 22 per cent of owners have turned to personal credit cards, home equity lines of credit, or personal loans to fund their businesses over the past 12 months. Meanwhile, 28 per cent have cut their own salaries and 15 per cent have stopped paying themselves entirely.
Trade war takes its toll
Nearly two in three (65 per cent) Canadian small business owners say their business has been directly affected by U.S.-Canada trade tensions, with the most common impacts being increased costs of goods or supplies (38 per cent), lower revenue (27 per cent), and declining customer demand (26 per cent).
Owners dealing with trade-related disruption are more than twice as likely as those unaffected to report that their business is performing worse in 2026 than it did in the same period of 2025 - 52 per cent versus 27 per cent. And among those already posting weaker results, the revenue impact is especially stark: 46 per cent cite lower revenue from trade tensions, compared to just 12 per cent of owners whose businesses are performing better.
U.S. Section 338 tariffs of up to 50 per cent on approximately US$20 billion of Canadian goods took effect August 22, 2026, after trade talks between Ottawa and Washington collapsed. The Merchant Growth data captures the downstream effects of that breakdown on owner sentiment and business performance.
The report also found that 37 per cent of Canadian owners believe small business has no voice at all in the trade negotiations, while more than two in three (68 per cent) say federal and provincial government tariff supports have had no noticeable effect on their operations.
Owners cutting costs, raising prices - or walking away
The pressure is reshaping how owners manage their businesses in 2026. Inflation and rising input costs remain the single biggest constraint, cited by 44 per cent of owners, followed by weak customer spending (38 per cent) and rising fuel and energy costs (36 per cent).
Overall, 43 per cent of owners say their business is performing worse so far in 2026 than in the comparable period of 2025, versus 15 per cent who say it is performing better.
In response, 22 per cent of owners have already raised prices, 15 per cent have delayed or cancelled a planned investment, and 11 per cent have reduced staff or hours. Looking ahead to the next six months, 22 per cent plan further price increases, 11 per cent plan to defer investment, and only four per cent plan to hire additional staff.
Most strikingly, 14 per cent of all owners plan to wind down their business in the next six months. That figure rises to 26 per cent among owners whose business is performing worse, and to 19 per cent among those directly affected by trade tensions, compared to just six per cent of owners who have not been impacted.
The broader economic outlook for Canada in 2026 remains subdued, with trade uncertainty continuing to weigh on business valuations, consumer spending, and investment planning across the country.
The 'Buy Canadian' bump isn't reaching most owners
Consumer sentiment has shifted. More than half (56 per cent) of Canadian consumers say they have shopped more from Canadian small businesses over the past 12 months than in previous years - consistent with the same finding in 2025 - and 24 per cent say they have shopped much more, up from 20 per cent a year earlier.
The top motivations are supporting the local economy (75 per cent), supporting Canadian jobs (69 per cent), and U.S. tariffs (55 per cent).
But the translation to actual business uplift is limited. Two in three (67 per cent) Canadian small business owners say the "Buy Canadian" movement has had no noticeable positive impact on their business in 2026, while just 24 per cent report a meaningful benefit.
What advisors should be watching
The Merchant Growth report highlights a pattern that warrants close attention from financial planners: owners facing the worst conditions are are increasingly drawing on personal wealth to backstop their businesses.
Among those whose businesses are underperforming, personal credit use, salary reductions, and potential closures are all elevated. For advisors, that dynamic creates both a planning risk and an engagement opportunity.
The Canadian Federation of Independent Business, which represents approximately 103,000 member businesses across every industry and region, has continued to call for targeted relief, including a Small Business Tariff Relief program and a reduction in the small business corporate tax rate from nine to six per cent retroactive to January 1, 2026.
Those policy levers, if enacted, could meaningfully change the cash flow picture for owner-operator clients currently funding operations from personal savings.
Advisors looking to deepen their value proposition with small business clients can find context on how Canadian firms are navigating the trade environment in recent coverage of the tariff crunch on Wealth Professional including what the data from Statistics Canada and Export Development Canada suggests about the trajectory ahead.
Earlier analysis tracking how over 53,000 small businesses have been put at risk by the trade war provides useful context for client conversations. And for advisors looking to better serve entrepreneur clients through economic downturns, a previous Wealth Professional report on how advisors can help struggling small business owners now remains relevant.
