Economic crisis in Canada: trade war slows down innovation and investment!

Economic crisis in Canada: trade war slows down innovation and investment!

Economic uncertainty in Canada is growing due to the ongoing trade war with the USA. According to a KPMG survey of 250 executives at large and mid-sized Canadian companies conducted between May 9 and May 20, 2025, two-thirds of respondents are currently unable to invest in productivity improvements. These restrictions are seen as worrying by 92 percent of companies, as they believe that investments in productivity-enhancing technologies are essential in order not to fall behind in international competition, especially with the USA. Pressetext reports that 59 percent of companies said they could not afford these investments due to the current economic environment.

The survey results also show that about half of companies have either already made cuts in research and development or are planning to do so in the coming year. 66 percent of executives say that the trade war is making long-term investment planning significantly more difficult. These challenges mean 54 percent of respondents are spending less on research, development and investment, with 57 percent planning similar cuts next year.

Price increases and sales forecasts

Another worrying trend is the expected price increase: 63 percent of companies plan to increase their prices, while 58 percent have already revised down their sales forecasts for 2026. In addition, 33 percent of those surveyed would like to see trade barriers between Canadian provinces removed, highlighting the urgency of economic reforms. Nearly 29 percent prioritize streamlining and accelerating major infrastructure and energy projects, while 13 percent call for a comprehensive tax review. Press release highlights that these factors strongly influence the investment landscape in Canada.

The impact of the trade war is not just limited to Canada. German companies are also reacting to the changed geopolitical situation and the change in economic policy in the USA. According to KPMG, German companies plan to diversify their activities and reduce their dependencies on a few large markets. 51 percent of the companies surveyed are evaluating entering new target regions such as Africa, South America or Eastern Europe.

Diversification of markets

20 percent of German companies focus on the Asian continent. Despite the challenges, 21 percent of companies have plans to build new production facilities in the USA. What is surprising is that 19 percent are even considering a complete withdrawal from the USA. Andreas Glunz emphasizes that the German economy is diversifying its business activities in order to avoid cluster risks in the USA. However, only 4 percent of companies are considering exiting China.

Overall, these developments illustrate how the international economic situation and political decisions are closely linked and what far-reaching consequences they have for companies in different countries.