Canada’s economic prosperity depends on trade, and that trade is “under attack,” Bank of Canada governor Tiff Macklem said on Tuesday.
“Canada is a trading nation,” Macklem said in a copy of his speech to the Saskatchewan Trade and Export Partnership and the Greater Saskatoon Chamber of Commerce that was posted by the central bank.
He noted in the remarks that Canada depends on exports for one-third of its income.
“Unfortunately, trade is under attack,” he said.
Macklem’s speech identified several megatrends currently shaping the trade and economic landscape globally, while identifying threats to the global economy and to Canada directly.
He also spoke about several specific policy measures that are currently under discussion by political leaders in Ottawa and the provinces, saying such measures could help tackle the headwinds from the trade war imposed by U.S. President Donald Trump.
“Canadians have embraced the power of economic patriotism—elbows up. But now we need to roll up our sleeves and do the hard work to be more competitive,” he said.
He added that Canada needed to knock down interprovincial trade barriers.
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“There is momentum to eliminate interprovincial trade barriers. We need to take a comprehensive approach that lowers the cost of doing business across the country,” Macklem said.
The list of barriers includes mutually recognizing provincial labour accreditation for many professions, he said, which are among the measures being discussed by political leaders across the country as part of an effort to dismantle internal trade barriers.
Macklem also proposed infrastructure investments.
“I would include better east–west transportation links to grow our internal market and get our products to overseas markets. I’d also include new port capacity to reduce our dependence on the United States,” he said.
“If we can get our products overseas, we have some of the best market access in the world. Canada has trade agreements with 50 countries beyond the United States.”
Macklem said diversifying Canada’s trading relationships is necessary, in part, because of the U.S. losing its dominance in the global economy.
“In 2000, the United States was dominant. Now, the global trading network has three main hubs—China, the United States and the euro area,” he said.
Macklem encouraged Canada to learn from the lessons of the Great Recession.
“We need to learn from the past: the recession in 2009 highlighted how vulnerable we are to a drop in US demand, and everyone talked about diversification then, too. But not much happened. This time we need to follow through,” Macklem said.
He said Trump’s global tariffs have shaken global confidence in the future of the U.S. dollar as a hedge currency.
“President Trump’s ‘Liberation Day’ shook global confidence, and the dollar’s safe-haven role was called into question,” Macklem said.
Macklem also remarked on Trump’s efforts to influence the U.S. Federal Reserve.
“President Trump’s attempts to influence the Federal Reserve are raising questions about the continued independence of US monetary policy,” he said.
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