Canadians have moderated their spending over the last quarter while keeping everyday commerce steady. Card data from TD Economics and survey findings from Interac Corporation show smaller, more frequent transactions and a shift toward buying from local merchants instead of big-ticket or international goods.
TD Economics have reported real consumption essentially flat in the second quarter of 2025 as spending on goods and services contracted. It would seem consumers are favouring predictable costs and immediate settlement at local tills.
How Canadians Paid and Where They Shopped
The reason for this is that the local policy backdrop shifted during the last quarter, as Ottawa adjusted countermeasures to U.S. tariffs, with mixed price effects by category.
The data showed households spread out grocery and household purchases across the month, a pattern consistent with tighter budgets. Categories facing financing or upgrade decisions, such as furniture and home goods, were notably soft.
Instead, Canadians turned to supporting small restaurants and buying affordable indulgences such as locally baked goods and premium jams and honeys to lift their mood. Health and wellness purchases topped the list of “essential luxuries” that Canadians would not cut, followed by personal care products and streaming subscriptions.
For other online entertainment and discretionary buys, Canadians compared platforms by payment rails as much as by price. If you are assessing Canadian-friendly iGaming options, for example, interac casinos allow you to make payments and withdrawals with Interac, which keeps more dollars local. It’s also widely trusted by Canadian users for its security and familiarity. Similarly, in sectors like transportation and personal services, Canadians are increasingly opting for businesses that accept Interac Debit, particularly for in-person and contactless payments.
What the Interac Snapshot Adds
Interact reports a measurable shift toward neighbourhood businesses. From April to July 2025, small and medium-sized businesses recorded an incremental 15 million more Interact Debit transactions than over the same period last year, even outpacing large merchants on volume growth.
The Interac survey findings fielded July 25 to 31, 2025, show that nearly eight in ten Canadians, that is, 78% redirected at least one monthly purchase from a big-box or international retailer to a local business after the tariff announcements. 25% of survey participants reported shifting three to five purchases a month, while 20% shifted six or more.
Spending at restaurants illustrates this trend. Within the April to July window, volume growth for local, independent restaurants was twice that of their chain counterparts. Consumers are reportedly also spending more on small food treats: 42% increased purchases of fresh produce at farmers’ markets, 30% bought more baked goods from local bakeries, and 21% increased spending on premium jams, sauces, and honeys. The survey also found that 70% check labels for Canadian origin, while 65% prioritise non-U.S. goods if no Canadian option exists.
The Consumer Picture from Card Data
TD Economics’ spend report characterises Q2 consumer behaviour in credit and debit card purchases as a pause. Goods led the pullback, furthered by a large decline in spending at gas stations, as pump prices fell sharply year over year. Services momentum also slowed down, with travel spending tracking a second quarterly decline and other service components contributing very little.
According to these findings, TD projects real personal consumption to finish the year 2025 at about 0.4 percentage points below what it was forecast in March. They also predict that spending growth is expected to run at a below-trend 1.3 to 1.4% in late-2025 and early-2026 amid a softer labour market and modest income gains.
Tariffs, Dates, and What Changed
Trade policy has moved substantially during this quarter and into early September. Early in March 2025, Canada imposed tariffs on 30 billion dollars’ worth of U.S. goods as a countermeasure to U.S. sanctions. On March 13, Canada then added a reciprocal 25% tariff on a further 29.8 billion dollars of U.S. goods. This came after the United States imposed 25% tariffs on Canadian steel and aluminium products.
Then, in April, Canada applied 25% tariffs on non-CUSMA-compliant vehicles from the United States, as well as on non-Canadian and non-Mexican content of CUSMA-compliant vehicles. However, since September 2025, most of the Canadian counter tariffs have been removed. Tariffs on steel, aluminium, and automobiles still remain in place.
Categories previously covered by those counter tariffs removed on September 1 have since seen gradual price relief as contracts roll-and-supply resets, even though timing varies by retailer and inventory cycle.
Because automobiles and construction-linked materials remain exposed to tariff costs, caution persists on large purchases, even as the rate cuts are easing borrowing costs. As mentioned, local commerce held up. Transaction counts rose at small businesses, and debit cards remained the go-to for routine purchases and transit taps.
Conclusion
The quarter’s spending profile was defined by flat real consumption, a goods-led pullback, softer services, and a clear local tilt in transaction volumes.
Short-term momentum remains restrained. Businesses can expect spending growth to moderate before stabilising, with interest-rate relief cushioning, but not reversing the drag from a weaker labour market.
If tariff exposure eases further, price effects would flow through unevenly, appearing first in those consumer categories where countermeasures were lifted in September, and where supply agreements can refresh quickly. For areas still subjected to tariffs, however, pricing is likely to stay firm until policy or cost structures change.
