Bank of Canada surveys reveal deepening pessimism among Canadian firms and consumers as the US trade war drags on. Executives report hesitancy to invest and hire, while households grow more cautious about spending. This persistent gloom threatens to dampen an already slowing economy.

The surveys highlight how trade uncertainty is becoming a structural headwind for Canada's export-driven sectors. With key industries like manufacturing and agriculture facing tariff threats, business investment—a critical driver of growth—has stalled. This sentiment erosion could prompt the central bank to reconsider its policy stance.

Investors should watch upcoming inflation data and the Bank of Canada's next policy decision for signs of a more dovish turn. The surveys suggest that without a resolution to trade tensions, Canada's economic recovery may remain elusive, weighing on the Canadian dollar and corporate earnings.