The Bank of Canada has released the results of its Canadian Survey of Consumer Expectations (CSCE) for the third quarter of 2025. The survey, conducted from July 31 to August 21, 2025, with follow-up interviews through August 28, provides insights into how Canadian consumers are responding to ongoing trade tensions and tariffs.
According to the report, tariffs and trade conflicts continue to influence consumer spending plans and perceptions of financial health. Many respondents indicated a preference for buying Canadian goods and vacationing within Canada. The survey found that while there was a modest improvement in overall financial health and household spending intentions compared to previous quarters, concerns about the labour market persisted.
The CSCE indicator—a measure summarizing opinions on spending plans, the labour market, and personal finances—rose slightly from its recent low but remains below pre-trade conflict levels. "Yes, gas has come down. So that’s why our spending is up," said one respondent.
Consumers who believe the worst effects of trade tensions are still ahead reported feeling less financially secure. One participant commented, "Tariffs themselves have created an impact, but the uncertainty has also created an impact."
Spending intentions improved primarily among homeowners and older individuals who have accumulated more wealth. In contrast, expectations declined for younger people and those with only a high school education. Discretionary spending on items such as furniture, appliances, restaurant meals, and vacations remained subdued.
Economic uncertainty continues to weigh heavily on consumer decisions. About half of respondents cited high prices, economic uncertainty, and elevated housing costs as barriers to spending. Price differences between domestic and foreign-made goods remain important; three-quarters said they would not pay more than an additional 10% for products made in Canada. "I’m going more out of my way now to buy Canadian. I would say I am willing to pay more these days for products made in Canada. Not a substantial amount more. I’d say 5%–10% more at the most," one respondent explained.
The survey also showed that two-thirds of consumers expect Canada’s economy to enter a recession within the next year. "I think we’re honestly in a recession, or going to be in a really bad recession pretty soon. I don’t see it getting any better for quite some time," said another participant.
Labour market sentiment worsened this quarter despite slight improvements elsewhere. Consumers reported lower chances of voluntarily leaving or finding new jobs—a trend particularly notable among public sector workers amid federal government expenditure reviews. One public sector worker noted: "The government’s priority is to rein back spending, and that’s having a direct impact on staffing. It’s frustrating because I want to stay in the public sector and do something for Canadians, but the opportunities are shrinking."
Concerns about job loss remain higher than before early 2025 trade tensions began—especially among workers in sectors dependent on US-Canada trade such as steel and auto manufacturing. As one respondent stated: "I am concerned about the impact of tariffs and trade tensions on the labour market because if we have large-scale layoffs in our steel and auto industries, then it’ll have a cascading effect on the rest of the economy."
Expectations for short-term inflation remain above pre-pandemic averages; long-term inflation expectations have also increased slightly this quarter but are near pre-pandemic norms. Tariffs are widely seen as contributing to price increases: "Tariffs are causing a lot of things in Canada in general to just be more expensive than they [otherwise] would be," said one person.
Many consumers anticipate significant rises in motor vehicle prices over the next year due to tariffs depleting existing inventories: "Vehicles for sale right now were bought [by car dealers] before tariffs came in place. Once the pre-tariff stock of vehicles is gone, then we will see a really big impact on vehicle prices," another respondent remarked.
A growing share sees tariffs as the main obstacle hindering the Bank of Canada's ability to control inflation; around 70% believe that the most serious inflationary impacts from trade tensions have yet to materialize.
The CSCE collects information about consumer views regarding inflation expectations, employment prospects, and household finances across Canada each quarter; further details can be found at https://www.bankofcanada.ca/2025/10/canadian-survey-consumer-expectations-third-quarter-2025/.