Many Canadian businesses say they’re in limbo while waiting to see what happens with the Canada-United States-Mexico Agreement (CUSMA).

The trade pact is up for review as of July 1 and U.S. President Donald Trump has signalled it may be a tough negotiation, even teasing that he may terminate the agreement altogether.

“I’m thinking about maybe we won’t be able to make a deal,” he said at the G7 summit last week. “I would rather not have the CUSMA. The primary reason I wanted it was because there was no way out of NAFTA, which was the worst trade agreement ever made.”

Canada and Mexico, however, are pushing for a six-year extension of the agreement to 2042 from 2036, though Prime Minister Mark Carney has said it’s “no secret” Trump doesn’t like the deal.

With so much trade uncertainty in the air, many businesses are taking a “wait-and-see” approach before making any structural changes to their operations.

Nearly 40 per cent of businesses believe they are ready to implement changes quickly if CUSMA deteriorates, while 30 per cent of businesses believe they only need minimal planning, according to a recent survey by Purolator Inc.

“The companies best-positioned for what comes next share a common trait: They didn’t wait for certainty before acting,” the report said. “They diversified suppliers, built secondary manufacturing relationships, invested in CUSMA compliance infrastructure and established contingency plans before they needed them. The opportunity to join that group is still open, but it’s narrowing.”

Of course, Canadian businesses are no stranger to dealing with tariffs, as they have been a signature policy of Trump’s second term, but tariffs have cut their revenues by about 23 per cent, or an average of $661,000.

More than 90 per cent of businesses have already made at least one operational change over the past 18 months due to the tariffs, most commonly reducing exposure to the U.S. and building some flexibility into the supply chain.

Still, the uncertainty of what may come next is leaving many businesses in limbo. Businesses consistently said the uncertainty surrounding international trade is worse than the tariffs themselves, the Purolator survey said.

“A tariff is a cost. It can be modelled, absorbed, passed through or built into a contract. Uncertainty is different,” the report said. “It paralyzes planning, delays investment and forces businesses into reactivity. Rather than preparing for what comes next, they must focus on responding to what just happened.”

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High gas prices helped Canada’s retail sector report a 0.5 per cent increase in activity in April, though economists warn the increase does not mean strong consumption.

Sales at gas stations rose 5.1 per cent in the month, while sales at motor vehicle and parts dealers climbed 1.7 per cent.

Overall, April marked the fourth consecutive monthly increase in retail sales.

Despite the positivity, Randall Bartlett, deputy chief economist with Desjardins, warned that the numbers are misleading, as retail sales were weak overall.

Read more here.

  • Today’s Data: Consumer Price Index for May

  • ‘Bloodbath for sellers’: Tales from the frontlines of Toronto’s condopocalypse
  • Canadian dollar closing in on 70 cents U.S. on ‘brutal’ selloff — and it might not stop there
  • Why mortgage brokers tend to favour variable rates over fixed
  • Regulator cuts big banks’ capital buffer for the first time in three years

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Today’s Posthaste was written by Ben Cousins with additional reporting from Financial Post staff and Bloomberg.

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  • Trump says he’d rather not have CUSMA, teasing termination
  • Carney says U.S. wants to avoid changes to CUSMA

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