Statistics Canada reported this week that the number of active businesses was effectively flat in April on a month-over-month basis, increasing by just 0.1 per cent.Nathan Denette/The Canadian Press
Even before U.S. President Donald Trump came along threatening to kneecap Canada’s economy through tariffs, the vibrancy of this country’s business sector, as measured by the number of active businesses, was already weak.
The trade war with the U.S. has only deepened the rut.
Statistics Canada reported this week that the number of active businesses was effectively flat in April on a month-over-month basis, increasing by just 0.1 per cent. And below the surface, Statscan found a troubling trend.
Sectors that are dependent on U.S. demand, such as mining, oil and gas extraction and manufacturing, experienced a sharper decline in the number of active businesses from the start of last year than other sectors, and the gap has widened since Mr. Trump and his Make America Great Again agenda returned to the White House.
The decline in sectors dependent on U.S. demand began before that, though, suggesting “other factors such as shifting global demand or domestic industry dynamics could be at play,” Statscan said in its report. However, “the continued decline in 2025 may reflect added pressures from the evolving trade environment.”
In a period of deep trade uncertainty, it makes sense that entrepreneurs would be wary of launching businesses that rely on the U.S. market. But that reticence is taking hold across the economy.
Companies are passing rising tariff costs on to U.S. consumers, real-time pricing data show
The active-business measure is an indicator of dynamism in the economy, as it reflects the difference between business openings and closures. Over time, when the economy is good, the active-business count tends to rise.
But Canada is in the midst of a longer-term slump in active businesses. On a year-over-year basis, the count shrank 0.1 per cent in April, after also suffering declines in the previous three months – the only time that has happened outside the pandemic since Statscan began tracking business counts this way in 2015.
Decoder is a weekly feature that unpacks an important economic chart.