Canadian businesses face a volatile global economy marked by rising oil prices, U.S. tariffs, and geopolitical tensions. To remain competitive, firms must strengthen internal resilience through scaling operations, adopting technology, and diversifying supply and customer chains.
Oil Prices Rise as US Tariffs Heighten Risks
- Oil prices surpassed US $100 per barrel in September due to ongoing Middle East conflict, increasing operational pressures.
- A new round of U.S. tariffs on Canadian goods heightens risks for companies heavily reliant on the American market.
Scaling Operations to Overcome Productivity Lags
Small businesses with fewer than 100 paid employees make up 98 per cent of all Canadian operations, according to data from the Canadian Chamber of Commerce. While these localized firms form the backbone of the domestic economy, smaller operations often face structural hurdles when attempting to boost productivity without scale.
Larger firms possess deeper capital reserves to absorb external shocks and fund research, development, and talent acquisition. Larger enterprises capture structural advantages through economies of scale, spreading fixed overhead costs like enterprise software licenses, legal counsel, and human resources across higher volumes of output.
For smaller firms, scaling up through organic growth or mergers and acquisitions remains a primary pathway to unlocking capital. Increased scale directly translates to heightened capacity for technological integration and long-term market competitiveness.
Foreign Investment Grows Despite Low Technology Adoption
Persistent underinvestment in business technology has weighed on Canadian productivity growth for over a decade. Companies that fail to pursue digital transformation risk operational inefficiencies, heightened exposure to cyber threats, and missed e-commerce expansion opportunities.
However, capital inflows are shifting. Foreign direct investment into Canada reached nearly $100 billion CAD in 2025, marking the highest level recorded since 2007. This figure stands to rise following Mark Carney’s Canada Investment Summit, which generated close to $500 billion in new investment commitments in September.
Businesses can use federal programs, including the national AI strategy and the productivity mega-deduction, to modernize operations. The productivity mega-deduction positions Canada’s marginal effective tax rate for new business investment as the lowest among G7 nations, encouraging deployment of software, fibre-optic infrastructure, and advanced computer equipment.
| Economic Indicator | Metric / Value | Context |
|---|---|---|
| Small Business Share | 98% | Proportion of Canadian businesses with fewer than 100 paid employees (Canadian Chamber of Commerce). |
| Foreign Direct Investment | Nearly $100 Billion CAD | Total reached in 2025, representing the highest annual volume since 2007. |
| Summit Investment Commitments | Close to $500 Billion | Secured during the Canada Investment Summit in September. |
Diversification Across Customers and Suppliers
Recent global disruptions, spanning pandemic-related bottlenecks, supply chain fractures, and international trade disputes, demonstrate the vulnerabilities of single-source models. Traditional just-in-time supply chains anchored to single suppliers increasingly expose firms to operational halts.
To insulate against external shocks, Canadian businesses are pursuing dual-ledger diversification across both client bases and supply channels. Domestic markets offer immediate expansion avenues as interprovincial trade barriers gradually recede, creating accessible pathways for firms to distribute goods nationwide.
Disclaimer: The information provided in this article is for educational and informational purposes only and does not constitute financial advice.
