Ontario businesses brace for bleak 2026, as strikes, tariffs and operational costs spike

Strikes, tariffs, and unattainable operations standards marked much of 2025, and little relief is in sight.

The last calendar year has put immense strain on not just the wallets of the average Canadian but also on small businesses, which have been contending with an endless game of catch-up for the last several years.

To grease the wheels of economic movement, both the feds and the province have issued several programs designed to patch up holes from the on-and-off tariff implementations of U.S. President Donald Trump.

Data from the business support platform Merchant Growth has shown that, despite incentives like the Protect Ontario Financing program, which supports steel and aluminum manufacturers, small businesses provincewide continue to feel left out.

“We are seeing billions of dollars of aid across the country being thrown at large corporations and mega infrastructure programs, and certainly we are not saying these are not strategic priorities, but what we are saying is that there have been a lot of empty promises around supporting other businesses,’ Joe Cote, CGO at Merchant Growth, told INsauga.com.

Based on findings in the 2025 Canadian Small Business Resilience Report, 72 per cent of surveyed businesses in Ontario indicated they feel abandoned by any financial relief incentives from the province or the Carney administration.

Parallel to this, over 50 per cent have stated that their businesses’ performance has worsened throughout 2025, leaving many concerned whether their livelihoods will last long enough to see 2026.

“It boils down to the never-ending operational costs in some way, shape, or form. Even though for now, interest is steadily going down, nothing has changed for utility bills, and nothing has changed for lease rates either,” says Cote.

“They’re constantly staring down the barrel of a gun, forced to engage with, often, yet another price increase.”

Breaking down operational costs, 60 per cent of businesses have had tariffs raise the costs of their goods, 35 per cent have cited lower demand as a result, 30 per cent have marked lost revenue, and 14 per cent are suffering both supply chain disruptions and cancelled orders from clients.

Throw in a nationwide Canada Post strike, which curtailed the flow of shipping, and small businesses now more than ever are feeling the walls close in, with little to no shot for an escape.

At the time of publication, the ongoing Canada Post strike has entered a ‘rotating strike’ status, wherein mail service will continue alongside strike action. However, according to watchdogs — much like tariffs — any pendulum swing leading to market disruption will likely hit small businesses before anyone else.

“Small businesses are really one of the last profitable customer groups for Canada Post, so every time there is a service disruption, from what we have seen, more small businesses are leaving Canada Post for good. According to our data, since their last strike, 13 per cent of Canadian businesses have stopped using the service altogether,” Michelle Auger, senior policy analyst with the Canadian Federation of Independent Businesses (CFIB), told INsauga.com.

Canada Post is currently on the picket line due to challenges caused by new policies, as recent overhauls to the service imposed by the federal government will, according to union representatives, likely put numerous postal jobs at risk.

As last year’s strike (over work and wage conditions) lined up with the holidays, Auger stated it came as no surprise that retailers barely getting by relinquished trust in the service. Additionally, based on the CFIB’s numbers, despite action to keep the mail moving, at least two-thirds of Canadian businesses are now considering removing Canada Post as a shipping partner.

“It really has been a tough year for small businesses; they’re facing essentially rising costs on all fronts, and now you have this economic uncertainty clashing with this strike. As a result of this, for the CFIB’s pre-federal budget recommendations — coming up this fall — we are actively looking at measures to bring a certain cost reprieve for small business owners on a federal level,” says Auger.

For Elizabeth Mywaart, CEO of Pendennis Weddings & Events, a Canadian events organization, the clock is ticking on any meaningful intervention, especially as she has seen budgets for bridal parties, weddings, and other events shrink, severely impacting her bottom line, especially as young Canadians are unable to spend money due to living costs.

“The majority of Gen Z customers are clearly indicating that they can’t afford to support Canadian businesses, that they have to go shop somewhere else. It’s a huge number of them, and that’s our future, so if they can’t afford it now, what odds are there that they will be able to in the future?” Mywaart told INsauga.com.

Circling back to the 2025 Canadian Small Business Resilience Report, 99 per cent of people in Ontario would rather directly support small businesses when given the opportunity. Out of that pool, however, 54 per cent cited prices for Canadian goods being too high, while 37 per cent cited limited product availability, with 26 per cent confused by transparency on whether or not a product is Canadian.

Cote adds that, as a result of the empty pockets of Canadians, 14 per cent of small business proprietors have had to take on a second job outside full-time business management, while 83 per cent of them are making sacrifices to keep the lights on, such as taking cuts to their own income to pay staff and delaying any prospects for retirement — or beyond that — suspending them indefinetly.

“As of now, there is no help on the horizon for the next 12 to 18 months, and it begs the question, how long can they sustain this? I think we are going to see some telling truths in the next two months ahead,” says Cote.

Much like Auger, who is currently drafting proposals for small business support, Cote believes that the only way to give small businesses a fighting chance is through some form of relief program, whether provincial or federal.

However, with many businesses shutting their doors permanently daily, time is tight.

“Anything, anything material concrete coming from any government level that says ‘here’s what we are doing for you and here’s how you can take advantage of these programs’ will help immensely. Without that, I just don’t see the road being very optimistic.”