A new KPMG survey points to forces that rate cuts alone cannot fix
Two thirds of Canadian businesses have adjusted prices to cover tariff costs, and regulatory gridlock is constraining new housing supply across the country, according to a new KPMG Canada survey.
The KPMG Canada National Business and Trade Outlook survey, conducted between June 25 and July 13, polled 359 business owners and decision-makers at firms with annual revenues exceeding $10 million.
Just over half, or 51%, expect the federal government's economic measures to leave their businesses better off over the next three years, and 55% believe the government is making progress supporting Canadian businesses.
However, optimism is tempered by a demand for urgency. Sixty-six percent have already adjusted prices to account for some or all tariff costs, and 67% say regulatory requirements have created institutional gridlock, delaying projects and deterring investment.
Regulatory gridlock straining housing supply
For mortgage brokers, those figures carry direct consequences. Regulatory red tape has been driving up Canadian home prices, with Canada Mortgage and Housing Corporation (CMHC) research finding that a 10% increase in a municipality's regulatory restrictiveness correlates with a 14% rise in house prices.
The KPMG survey amplifies that concern: business leaders ranked removing red tape and accelerating regulatory reform as their top government priority, tied at 50% with fast-tracking a new west coast oil pipeline, ahead of accelerating major infrastructure projects (47%) and tax reform (43%).
"Businesses accept the need for appropriate safeguards, but want faster, more predictable processes that accelerate project delivery and enable investment and scaling decisions," said Lachlan Wolfers, National Leader, KPMG Law.
A separate finding underscored the scale of the concern: 65% of respondents agreed that over-regulation and higher taxes make it harder for businesses to scale and remain in Canada. That's a dynamic that when applied to developers and homebuilders, translates directly into constrained new housing supply.
KPMG Canada — National Business & Trade Outlook
Survey of 359 Canadian business leaders • Conducted June 25–July 13, 2026 • Annual revenue >$10M CAD • Angus Reid Forum
Trade uncertainty and the Bank of Canada rate hold
The survey also reflects the broader trade volatility gripping Canadian business. The Canada-United States-Mexico Agreement (CUSMA) is now subject to annual reviews, prolonging trade uncertainty for lenders and the housing sector alike.
Nearly seven in ten (69%) surveyed leaders want Canada to hold a tough negotiating stance at the CUSMA table, and 65% say Canada should adopt a more transactional approach to the US relationship.
That environment has direct consequences for borrowers. The Bank of Canada has held its overnight rate at 2.25% since October 2025, its fifth consecutive hold as of June, with economists at RBC, Scotiabank, and TD Economics all citing trade uncertainty as the primary obstacle to rate relief before year-end.
Sherry Cooper, chief economist at Dominion Lending Centres (DLC), previously told CMP that the CUSMA outcome could prove decisive for Canada's housing market in the second half of 2026, with a large pool of prospective buyers waiting on the sidelines for economic clarity before committing to a purchase.
On diversification, the picture shows genuine adaptation. One in three (33%) businesses plan to expand into new export markets within one to three years.
"This is diversification, not decoupling," said Ali Jaffery, Partner and Chief Economist, KPMG Canada.
"Canadian businesses remain committed to the US market while building resilience and reducing risk through broader global trade relationships."
The European Union and United Kingdom were the most common non-US markets for increased exports in the past year.
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