Canadian firms embrace AI & efficiency to counter tariff pressures

Canadian businesses are maintaining a positive outlook for 2026 despite facing ongoing economic uncertainty and the impact of rising tariffs, according to findings from a newly published survey of 1,000 business leaders. Companies cite practical adoption of artificial intelligence and a commitment to operational efficiency as key strategies to address current challenges.

Economic sentiment

The survey data shows that 62.1% of respondents are optimistic about their business prospects for 2026, compared to 58% earlier in the year. Growth remains broadly positive, with 60.8% of business leaders reporting that their companies expanded over the past six months. Regional differences were observed, with 65.4% of Ontario respondents expressing optimism, while British Columbia trailed with 55.5% reporting positive sentiment.

Despite pressures from cost increases and shifting market conditions, most firms are maintaining or expanding their workforce. Nationally, 44.1% of respondents indicated current hiring plans, while 47.5% expect staffing to remain stable. Plans for layoffs remain subdued, at 11.2%.

Tariff pressures

Tariff-driven cost increases have emerged as the foremost concern, cited by two-thirds of respondents. Companies report that these added costs are prompting changes in supply chain strategies, reduced risks, and pricing adjustments as they strive to remain competitive. Notably, staff reductions remain a low priority for the majority of businesses, with leaders placing more emphasis on restructuring operations and enhancing efficiency to offset the effect of tariffs.

AI and automation

Artificial intelligence is being embraced by a growing cohort of Canadian firms, not as a speculative technology but as a means of driving tangible improvements. Currently, 23% of businesses have implemented AI solutions directly in response to tariff risks, with a further 41.9% evaluating adoption. AI is most commonly applied to tasks such as exploring new markets (45.9%), strengthening domestic supply chains (41%), and revising pricing strategies (39.3%).

Automation ranks as the highest technology priority, followed by new methods of innovation. Facilitating flexible work, previously a top concern, has declined in importance as operational efficiency and the customer experience have taken precedence.

Regional insights

Ontario businesses recorded the strongest growth and optimism, with 63.2% experiencing growth and 65.4% expecting continued expansion. Alberta's performance was also robust, with 60.6% reporting growth and 56.8% maintaining an optimistic outlook. British Columbia posted the lowest rates, with just over half (52.9%) growing in the past six months and a little over half (55.5%) optimistic about the future.

Hiring intentions reflected these patterns, with Alberta leading overall in hiring plans at 45.6%, while Quebec saw 44.5% of respondents seeking to add staff.

Government role

Respondents identified reducing internal-provincial trade barriers as the most useful policy government could adopt to assist businesses managing tariff-related cost increases. Securing more international trading partners and funding research and development were also prioritised by business leaders.

Operational strategy

"There is a strategic shift underway among Canadian businesses. They aren't waiting for economic conditions to stabilise-they're proactively redesigning their operations. The move toward AI and automation is about building resilience, improving margins, and protecting customer experience in an environment where costs are rising and predictability is hard to come by. That level of adaptability is why optimism remains strong going into 2026," said Chandrashekar LSP, Managing Director, Zoho Canada.

Many companies underlined the practical benefits already gained from focusing on AI and efficiency programs. Phil Edey, Business Analyst at Arctic Spas, said, "We're not treating AI as a future initiative-it's core to how we're managing volatility today. From automating dealer workflows and CRM processes to using AI for competitive intelligence and customer service, these tools are helping us protect margins and respond faster to market changes. The tariff situation has forced us to think differently about efficiency, but that's why we're optimistic heading into 2026: we're not waiting for stability, we're building it. The ROI isn't theoretical-it's measured in hours saved and better decisions."

David Fauser, Vice President of Sales at CIMCO Toromont, said, "As Vice President of Sales, I'm thrilled about the transformative power of AI and how it will enable our team to deliver even greater value to our customers. Since partnering with Zoho in 2009, we've accumulated thousands of data points. Now, with advanced machine learning and AI technologies, those data points will become actionable insights-empowering our sales team to make smarter decisions and provide exceptional service."