The rules that previously governed trade between Ottawa and Washington are no longer in force, Bank of Canada Governor Tiff Macklem said at a conference on Wednesday.
“The days of open, rules-based trade with the United States they have finished. We need to adapt to that. We will be better off if we adapt than if we don’t. But, of course, the end of open, rules-based trade with the United States it’s not good. It’s not good for Americans or Canadians,” Macklem announced.
In reference to possible forecasts, he considered that what prevails is a lack of certainty “unusually high”. “There are various risks and uncertainties, including geopolitical risks. Geopolitical uncertainties have increased. US trade policy remains very unpredictable,” he explained.
Macklem mentioned in that order the influence that the tariffs imposed by US President Donald Trump have had on the Canadian economy. “The level of exports initially increased considerably, as companies tried to get ahead of tariffsand subsequently decreased,” he said.
“We have seen some adjustments in companiesboth in imports and exports. We have found other supplier companies and we are exporting more to other countries,” he added.
The senior official recalled that, historically, 75% of trade from Canada has headed to the neighboring country. “Therefore, you need a lot of growth from other countries to compensate for the big decline that we’ve had with the United States. So they only provide partial compensation,” he clarified.
“It would affect us all”
“It’s very difficult predict the direction or the timing of the next move in our policy rate,” Macklem said.
In that sense, he stressed the importance of the US Federal Reserve. “The Federal Reserve is the largest and most important central bank in the world, and all we need it to work. A loss of Fed independence would affect us all,” he said.
“In the case of Canada, our financial markets are particularly integrated with those of the United States, so would especially affect us. “It’s hard to predict exactly what that would look like, but maintaining the Fed’s independence is good for Americans and it’s good for Canadians,” he said.
