Trade Tensions Weigh on Exports, Investment as Inflation Expectations Rise, Bank of Canada Survey Says

12:01 PM EDT, 10/19/2026 (MT Newswires) -- Canada-US trade tensions are undermining business sentiment, export sales expectations and investment plans, while rising oil prices and new tariffs are fueling inflation concerns, according to Monday's Bank of Canada's third-quarter Business Outlook Survey (BOS). Businesses surveyed after trade negotiations between the two countries collapsed on Aug. 21 reported weaker sentiment and heightened concerns over trade tensions, reversing some of the optimism that had emerged earlier in the quarter, said Canada's central bank in its latest BOS. The BOS survey was conducted between Aug. 6 and Sept. 2, with roughly three-quarters completed before the collapse of Canada-US trade talks and the announcement of new Canadian counter-tariffs, wrote the BoC. Heightened uncertainty has led to more firms reporting increases in both costs and selling prices. However, cost pressures remain more widespread, indicating that businesses are absorbing part of the additional tariff burden rather than fully passing it on to customers, added BoC. Inflation expectations have edged higher but remain below their early-2025 and April 2026 peaks. Amid persistent trade uncertainty, firms are diversifying supply chains, boosting efficiency, exploring new markets and reducing capacity, said the BoC.