Despite Trump’s tariff threat, Canadian CEOs optimistic on growth prospect, survey shows

Canadian CEOs are cautiously optimistic they can navigate U.S. President Donald Trump’s planned tariffs with a combination of global expansion and homegrown productivity initiatives, according to a survey released Wednesday by consulting firm PricewaterhouseCoopers.

 

Domestic business leaders are more likely than their global peers to make acquisitions, diversify product lines and build new facilities in the U.S. to boost profits and mitigate the potential impact of Mr. Trump’s increased levies, PwC Canada chief executive officer Nicolas Marcoux said in an interview on Tuesday.

 

“CEOs are taking concrete steps to ensure they can navigate a challenging trade environment,” Mr. Marcoux said. “Our CEOs are reviewing their strategies with an eye to ensuring their companies are future ready. That bodes well for Canadian businesses.”

Mr. Trump promised to boost U.S. manufacturing by imposing tariffs throughout the 2024 U.S. election campaign. Late Monday, hours after his inauguration, Mr. Trump said he planned to impose 25-per-cent tariffs on imports from Canada and Mexico as early as Feb. 1.

 

PwC’s global survey of 4,701 CEOs, including 167 domestic corporate leaders, found 55 per cent of Canadian CEOs expect economic growth to improve this year, up from 31 per cent last year and just 18 per cent two years ago, when businesses faced surging inflation, high interest rates and supply chain bottlenecks.

 

“Despite the uncertainty around potential economic measures that could come into effect with the new U.S. administration, Canadian CEOs remain remarkable resilient,” Mr. Marcoux said. He said many domestic leaders expect to expand operations in the U.S., while doubling down on efforts to boost sales in other foreign markets.

 

Canadian CEOs were slightly more likely than global peers to use acquisitions to build their businesses, according to the PwC survey. It found 58 per cent of domestic companies plan to buy a business in the next three years, compared with 54 per cent of global CEOs.

 

PwC also found 37 per cent of domestic CEOs had diversified their business in the past five years by entering new sectors, on par with global trends. For almost half of those companies, new ventures now account for 20 per cent of revenues or more. Mr. Marcoux said there is a healthy, overall trend toward “industry convergence,” with traditional boundaries between sectors collapsing and new players emerging.

 

Globally, the PwC survey showed CEOs are making the U.S. market their No. 1 target for new investment, followed by Britain, Germany and China. Mr. Marcoux said companies have been cutting their spending in China since the COVID-19 pandemic, with planned investment in the country falling to 9 per cent of capital spending this year from 22 per cent five years ago.

 

Canada failed to crack the list of top 10 destinations for planned capital spending by global CEOs. Mr. Marcoux said: “We need to make Canada a more attractive place for business to invest.”

 

To boost productivity, 79 per cent of domestic CEOs plan to integrate generative artificial intelligence (AI) into their operations in the next 12 months. Globally, 87 per cent of executives told PwC they will roll out AI in their businesses.

This gap in AI adoption is a “missed opportunity” for Canada, a leader in research in the field, Mr. Marcoux said. He said a common challenge facing domestic CEOs is “deploying AI at scale, rather than as an experiment.”

 

While Mr. Trump made fossil fuel producers a keystone of U.S. economic growth by urging oil and gas companies to “drill, baby, drill” in his inauguration speech, business leaders around the world plan to continue moving toward a decarbonized economy.

 

PwC’s survey showed 72 per cent of domestic CEOs and 81 per cent of global respondents made climate-related investment in their businesses over the past 12 months. It also showed adoption of electric vehicles, while slower than expected, will require manufacturers and utilities to change their business models. In a press release, PwC said: “A shifting value chain clears the way for other providers – including mining companies, battery manufacturers and owners of charging infrastructure – to participate in a new mobility ecosystem.”

 

 

 

 

 

This article was first reported by The Globe and Mail