Canada's Business Crisis: 35,000 Companies Lost as Transportation Sector Signals Deeper Economic Trouble
Canada lost 35,000 businesses in two years as closures outpaced openings for six consecutive quarters. Transportation sector collapse signals deeper economic trouble ahead, reflecting governance failures.
Monday, April 20, 2026· By Jason York
Canada has lost more businesses than it's gained for six consecutive quarters, with more than half (55%) of small business owners now saying they wouldn't recommend starting a business, according to a new report from the Canadian Federation of Independent Business. In the second quarter of 2025, exit rates reached 5.6%, while entry rates fell to 4.8%—marking some of the highest closure rates and weakest startup activity outside the pandemic. The country has hemorrhaged roughly 35,000 businesses over the past two years, and the gap between openings and closures keeps widening. The "entrepreneurial drought"—defined as four or more quarters where business exits outpace new entries—has been ongoing since early 2024, long before recent tariff tensions dominated headlines.
Canada's business net entrants turned sharply negative in early 2024 and have remained deeply underwater, with the country losing roughly 35,000 businesses over two years as the entrepreneurial drought intensified.
This isn't a short-term blip caused by external shocks. The CFIB research reveals deep structural problems with Canada's business environment. Two-thirds of small firms said they feel unsupported by their provincial governments, only 3% strongly believed their government had a clear vision for entrepreneurship, while 73% are not confident in the federal government. High costs, tax and payroll pressures, complex rules, red tape, and ongoing labour challenges against a backdrop of persistent global uncertainty all make entrepreneurship more difficult and less attractive. When existing business owners actively discourage others from following in their footsteps, you're watching the economy's seed corn get eaten. Every business that closes takes jobs, innovation, and community vitality with it—and Canada isn't creating enough new ventures to replace what's being lost.
The data gets more troubling when you look at which sectors are bleeding businesses. Healthcare and social assistance has remained relatively stable, posting modest positive growth around 0.2-0.4% monthly through mid-2025. Construction and manufacturing have wobbled between slight gains and losses, hovering near zero. But transportation and warehousing tells a different story entirely. Starting in January 2024, this sector's net entry rate went negative and hasn't recovered—plummeting from -0.4% to -2.3% by May 2025. The transportation and warehouse sectors are integral parts of the supply chain, and when companies expect their sales to grow, they first have to contract warehousing and trucking suppliers for more capacity. Transportation and warehousing function as leading economic indicators—they move before consumer spending does. When this sector contracts persistently, it signals that businesses don't expect growth. They're not expanding capacity because they don't see demand coming. The sustained collapse in transportation and warehousing businesses suggests Canada's economic engine isn't just sputtering—companies are betting it won't pick up speed anytime soon.
Transportation and warehousing businesses have experienced sustained collapse since early 2024, dropping to -2.3% net entry rate by May 2025, while healthcare remained stable and other sectors hovered near zero—signaling that companies don't expect economic growth.