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Amid heightened trade tensions with the United States, a rising number of Canadian business leaders fear an economic crisis is looming and are looking to other countries to offset the impact, according to the latest Léger survey conducted exclusively for Financial Post.

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The survey revealed that nearly 88 per cent of senior business leaders are worried about inflation as a result of the trade war (a nine per cent increase from February’s poll), and 85 per cent are concerned Canada’s economy could slide into a recession.

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Due to their growing economic fears, business leaders are more likely to take precautionary measures, said Andrew Enns, executive vice-president of Léger’s Central Canada operations.

The survey found 67 per cent of respondents reported they were considering or had already reduced spending and 62 per cent were considering or had already reduced or postponed investments. Fewer respondents said they had halted new hirings or have laid off existing employees.  

But these measures can ultimately become “a self-fulfilling prophecy,” Enns said. 

“Businesses don’t want to go into recession … but when you start slowing down investment (and) hiring, those are the things that probably propel us in that direction.” 

The survey also said 78 per cent of senior Canadian business leaders are in support of pursuing stronger and expanded trade relations with Europe and Great Britain, instead of with the U.S.  

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Meanwhile, President Donald Trump has threatened further retaliation if Canada and the E.U. were to join forces. 

“If the European Union works with Canada in order to do economic harm to the USA, large scale Tariffs, far larger than currently planned, will be placed on them both in order to protect the best friend that each of those two countries has ever had!” Trump said in a Truth Social post on Thursday. 

Enns wasn’t surprised that more business leaders have been losing faith in the U.S. as a reliable trading partner, from 58 per cent in the February edition of the report to 61 per cent.  

“There is also this acknowledgement that it’s easier to say than do,” he noted. “The U.S. has been a very convenient and profitable and mutually beneficial trading partner for a long time. It’s not easy to just simply pivot and (move business to) France.” 

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Still, Enns said that Canadian business leaders are likely looking into expanded trade with other countries as a longer-term solution.  

About 70 per cent of respondents said they were considering or had already begun looking for alternatives to American suppliers or clients and buying or investing more in Canada. 

The most recent edition of the Léger survey also investigated which domestic policy changes business leaders might support or oppose in a potential renegotiation of the existing Canada-US-Mexico Free Trade Agreement (CUSMA), which is set to be reviewed by 2026. Some of the proposed policy changes were related to issues Trump has already singled out, especially in light of his reciprocal tariffs (which involve non-tariff trade barriers). 

The policy changes most favoured by respondents were opening up the Canadian telecommunications sector to foreign competition (73 per cent) and allowing foreign airlines to serve domestic routes (66 per cent). About half supported the removal of Canadian cultural content restrictions, while 56 per cent supported getting rid of taxes on streaming platforms.  

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Enns thinks business leaders were less likely to concede on things like ending Canada’s dairy and poultry supply management rules (which 44 per cent of respondents supported and 40 per cent opposed), pointing to strong public support for domestic produce. Respondents were also less likely to be in favour of opening up Canada’s banking sector, which Enns felt could be partly attributed to how Canadian financial institutions withstood the 2008 crisis compared to the U.S.

Enns said he wanted to get a sense of what business leaders were prepared to put on the table. 

“In the past, we’ve been able to protect these ‘sacred cows’ and just talk about the other stuff,” he said. “The country may have to adjust some of its (positions) on these things if we’re going to get a workable, stable trade deal back in place with the U.S.” 

The survey was conducted between Mar. 19 to Mar. 25 among 250 members of the LEO Decision panel, a proprietary group of Canadian business leaders, established by Léger in collaboration with HEC Montreal. 

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