Canada Risks Falling Behind on AI Adoption as Businesses Wait Out Trade Uncertainty

Ottawa, ON - December 16, 2025 - Canadian businesses are adapting to rapid technological change and ongoing trade uncertainty, but momentum is slowing and competitiveness risks are rising, according to the Q4 2025 Business Insights Quarterly, released today by the Canadian Chamber of Commerce's Business Data Lab. The report focuses on AI adoption, small- and medium-sized enterprises (SMEs), and trade, three issues increasingly shaping business confidence, workforce decisions, and investment.

"Canadian businesses aren't standing still - but they are moving cautiously," said Patrick Gill, Vice President of the Business Data Lab at the Canadian Chamber of Commerce. "The risk right now isn't moving too fast on AI. It's falling behind."

AI use among Canadian businesses continues to grow, but the data show adoption is tracking a slower path, raising concerns about Canada's ability to keep pace with global peers.

Key findings on AI include:

• Canada's AI adoption rate is taking a slower path, which risks competitiveness vis-a-vis our peers. However, unlike with other aspects of AI, Canada could still turn the corner to lead.

• AI is becoming a skills story: The link between education and AI adoption strengthened in 2025, meaning gains will concentrate where talent is available.

• Use is broad but advanced AI is concentrated in knowledge-intensive sectors such as professional services, finance, and information and culture.

• Retooling outweighs retrenchment: Firms report workflow changes and training far more often than job losses, with no one-to-one link between AI adoption and employment declines.

• High-AI sectors are still hiring, including continued entry points for young workers. The transition so far looks good for the prospects of entrants to the labour market.

Among the findings for SMEs and trade:

• SMEs remain more downbeat than large firms, extending confidence gaps that predate recent trade tensions.

• Larger firms account for most recent gains, despite SMEs making up most of the workforce.

• About one-third of trade-engaged firms report negative impacts from U.S. tariffs, with the most severe effects concentrated among large exporters.

• Most firms - especially smaller ones - have taken no action in response to tariffs, delaying diversification and investment.

• Price pass-through is rising, increasing the risk that trade uncertainty feeds into inflation and weaker demand.

While Canada is avoiding a technical recession, business confidence remains below neutral, labour markets are cooling unevenly and insolvencies remain elevated - signs that firms are adapting defensively rather than planning for growth.

"Competitiveness will increasingly depend on skills, investment and the ability to adapt before external pressures force faster moves," Gill said. "2026 will be highly dependent on what policies are put in place to improve the business environment."

The full Business Insights Quarterly is also available below.

Key resources:

• Previous Business Insights Quarterly reports: https://businessdatalab.ca/survey-insights/

• BDLNow, our real-time, transparent GDP tracking tool: https://businessdatalab.ca/bdlnow/

About the Canadian Chamber of Commerce - The Future of Business Success 

The Canadian Chamber of Commerce is Canada's largest and most activated business network - representing over 400 chambers of commerce and boards of trade and more than 200,000 business of all sizes, from all sectors of the economy and from every part of the country - working to create the conditions for our collective success. The Canadian Chamber of Commerce is the undisputed champion and catalyst for the future of business success. From working with government on economy-friendly policy to providing services that inform commerce and enable trade, we give each of our members more of what they need to succeed: insight into markets, competitors and trends, influence over the decisions and policies that drive business success, and impact on business and economic performance.   

About the Business Data Lab (BDL)

Turning the overwhelming amount of economic data out there into actionable insights is a challenge for many organizations. That's why the Business Data Lab (BDL), launched in February 2022 by the Canadian Chamber of Commerce, provides free tools and real-time insights that help organizations understand Canada's economy as it is now and as it could be in the future. With support from Statistics Canada and funding from Innovation, Science and Economic Development Canada, BDL strives to ensure that rapid economic change and shifting business dynamics don't leave Canada's decision-makers behind. BDL is democratizing data on Canadian business conditions. By providing future-focused, real-time, and local insights, we help organizations better understand and navigate the Canadian economy.

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