Bank of Canada Governor warns of growth slowdown due to U.S. tariffs

Bank of Canada Governor Tiff Macklem has warned that escalating trade tensions and new U.S. tariffs could significantly impact the Canadian economy. Macklem indicated that the unpredictability of U.S. trade policy may cause businesses to delay investment and hiring decisions, potentially reducing fourth-quarter annualized GDP growth to approximately 0.75%—a sharp decline from previous forecasts.

In addition to trade concerns, Macklem highlighted persistent inflationary pressures driven by rising energy costs. With oil prices approaching $100 per barrel, the central bank is monitoring how fuel and heating costs might bleed into broader goods and services. While the Atlantic region is considered less exposed to tariffs than provinces like Ontario or Quebec, it remains vulnerable to high energy prices due to its reliance on furnace oil.

The Bank of Canada is currently navigating a delicate balance between managing inflation, which sits around 3%, and supporting a slowing economy. Macklem noted that if the bank is too slow to respond to inflation, it may be forced to raise interest rates more aggressively in the future.