OTTAWA — Canadian business leaders say economic uncertainty from the trade war with the United States is making it impossible for them to invest in boosting productivity, according to new research by KPMG.

The global professional services firm surveyed the leaders of 250 large- and medium-sized Canadian companies across several industries about their efforts to boost productivity. The results show 92 per cent agree Canadian companies should “ramp up their investments in technologies or risk falling further behind the U.S.”

More than half, though—59 per cent—said they couldn’t afford the technology they need “given the current economic environment.”

KPMG conducted the survey between May 9 and May 20.

Trade uncertainty with the U.S. has contributed to a new sense of urgency about Canada’s lagging productivity compared to international peers, but it has also cast a pall over Canadian businesses, said Sanjay Pathak, a partner with the firm who specializes in technology strategy.

“While Canadian companies have been making progress toward their productivity goals over time, this crisis kind of intervened,” said Pathak, who is based in Toronto. “They’re uniquely now unable to afford doing much more without some sort of intervention.”

The sample sizes for individual sectors are small. However, the challenge is particularly stark for respondents in the agriculture sector, all seven of which said they can’t afford to make those new investments, as did 89 per cent of public sector and Crown corporations.

The trade war has already had a staggering impact across sectors, and 66 per cent of respondents said it’s increasingly difficult to plan for longer-term investments as a result. 

The majority (63 per cent) said they plan to increase prices and 58 per cent said they lowered their sales outlook for the next year. 

Meanwhile, roughly half (54 per cent) said they’re already spending less on research, development and capital as a result of the trade war, while 57 per cent said they plan to make similar cuts within the next year.  

“The effects of all of this, without any kind of intervention and without any kind of changing posture, is going to be a backward step for Canadian business, for sure,” said Pathak. Still, the crisis also presents an opportunity for businesses and governments to confront Canada’s productivity crisis, he said. 

The survey asked respondents to rank three things the government can do to, in Pathak’s words, “remediate the effect.” Thirty-three per cent chose eliminating trade barriers between provinces, which Prime Minister Mark Carney has pledged to make major strides toward by Canada Day, and 29 per cent prioritized streamlining and expediting major infrastructure and energy projects. Only 13 per cent chose a comprehensive tax review as their top pick. 

The other thing Ottawa can do is continue to nurture the nationalistic Buy Canadian movement, which has given 77 per cent of respondents a sales boost in these uncertain times and prompted 87 per cent to consider Canada a growth market, Pathak said.

“Harnessing that energy and really capitalizing and building on that, it’s an incredible opportunity for us,” said Pathak.