The era of rules-based trade with the United States is over, Bank of Canada Governor Tiff Macklem said on Wednesday, echoing a stark warning from Canadian Prime Minister Mark Carney that global economic
relations have been permanently altered.
“It’s pretty clear that the days of open, rules-based trade with the United States are over,” Macklem said.
His remarks came days after Carney warned in a high-profile speech that US President Donald Trump’s leadership had caused a lasting “rupture” in the world economic order.
Macklem’s comments came as the Bank of Canada kept its key lending rate unchanged at 2.25 per cent, a decision that was widely expected. The central bank said the Canadian economy remains vulnerable to unpredictable US trade policies and ongoing uncertainty.
After a series of interest rate cuts beginning in 2024, the bank has signalled it wants to hold rates steady for as long as possible. Officials said this would allow them to better assess the impact of US tariffs introduced under the Trump administration.
The central bank warned that US protectionism has triggered a “structural change” in Canada’s economy. It noted that Canada is particularly exposed to US trade actions because of the deep links between the two economies.
“US trade restrictions and uncertainty continue to disrupt growth in Canada,” the bank said, just days after Trump threatened tariffs of up to 100 per cent on Canadian goods. Such measures, if imposed, would severely damage the economy.
However, the bank also pointed out that most trade between the two countries remains unaffected for now. More than 85 per cent of bilateral trade continues to be tariff-free under the United States-Mexico-Canada Agreement (USMCA), which Trump signed during his first term.
The USMCA is due for a formal review in the coming months, a process the central bank described as a key risk. Carney has repeatedly stressed the importance of the agreement to Canada’s economic stability.
(With inputs from AFP)
