The White House confirmed this week that President Trump would return to Canada to attend a Group of 7 leaders summit in Kananaskis, Alberta, in June.
And the G7 nations’ finance ministers and central bankers, as is customary, held their curtain-raising meeting in Banff, Alberta, this week. Alan Rappeport, my colleague who covers economic policy in Washington, was also there and reported that those top economic policymakers had left their three-day meeting with a statement of support for Ukraine and a warning to Russia of additional sanctions if there was no progress on peace.
[Read: G7 Finance Ministers Show Unity in Support of Ukraine Against Russia]
[Read: Global Economic Officials Gather Amid Headwinds From Trump’s Trade War]
And while they didn’t put out a statement condemning the global havoc created by Mr. Trump’s blizzard of tariffs, the economic policymakers did note that “trade and economic policy uncertainty was high and weighing on global growth.”
After the meetings ended, Alan and I spoke with Tiff Macklem, the governor of the Bank of Canada, in a video call. Our conversation has been edited for length and clarity.
Are U.S. tariffs the biggest headwind facing the global economy right now?
Different countries have different levels of integration with the United States. But for Canada, our economy is the most integrated with the United States. Our financial markets are the most integrative with the U.S. So certainly for Canada it is the biggest headwind.
Prime Minister Mark Carney has targeted cooperation and expanded trade with other nations. Will that offset the turmoil created by U.S. policies?
This idea that Canada needs to diversify its trade is not a new idea. I’ve given a number of speeches on this going back 10 years. Why hasn’t it happened to as big a degree as it could have? Frankly, it’s very easy for Canadians to do business in the United States. It’s geographically very close. We know each other well, we have similar laws, and yes, we’ve benefited by secure and stable trade agreements.
That has been mutually beneficial to both Canada and the United States.
Now, with new tariffs and increased uncertainty about exactly where our trading relationship is going, there’s no question that businesses are looking for other markets.
Companies are looking for new suppliers where they can source inputs that would not be subject to retaliatory tariffs or where would avoid the uncertainty about Canada-U.S. supply chains. And on the other side, they’re looking for new markets for their goods that could be more stable.
Do you foresee tighter economic integration between Canada and China as a response to the tension between Canada and the U.S.?
I’m not going to get into where the specific markets are. Just to build on my previous answer, clearly the most important imperative is to get a new trade deal with the United States, take the uncertainty down and provide clarity to Canadian businesses. The U.S. market is still and will remain our biggest export market. But it only makes sense to try and broaden our markets.
Has there been progress on tariffs and trade turmoil?
Under the Canadian presidency, we’ve now had several G7 meetings. The tone has become progressively better through these meetings. Discussions have been candid, which is a good thing. We certainly have more work to do, but the tone is becoming increasingly constructive. President Trump’s latest tariffs threats coming out of the White House this morning — yeah, not helpful.
[Read: Trump Turns Back to His Trade War, Threatening Europe and Apple]
Is the uncertainty created by Mr. Trump’s ever-shifting tariffs as harmful as the tariffs themselves?
This uncertainty is quite understandably causing businesses to pause their investments. They’re waiting for more clarity.
That is affecting all our economies. We did recognize at the meetings, and indeed welcome, that uncertainty has come down since early April.
Are Canadians likely to see significant inflation because of global price increases caused by U.S. tariffs as well as the country’s retaliatory tariffs?
I don’t think that you’re seeing that in the data yet. The question is, How much will you see going forward? And that is a very open question. The extent of pass-through of tariffs to consumer prices, the speed of it — there is some uncertainty around that. We are certainly going to be tracking that carefully. We don’t want it to become ongoing inflation in any way.
Is the United States under Mr. Trump still part of the global trading system?
Treasury Secretary Scott Bessent was here for the full three days. He was very engaged and fully participating. I look at his own comments coming out of the meeting. I think he found it productive. So yes, I think you are definitely seeing the U.S. engage on a multilateral basis with its six colleagues.
Trans Canada
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Vjosa Isai reports from Alberta on how the government of Premier Danielle Smith is laying the groundwork for a referendum on seceding from Canada. While the chances of separation are remote, many Albertans are increasingly dissatisfied by how they perceive their province’s treatment by the rest of Canada.
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While much of the focus on tariffs has been around the large auto assembly plants owned by multinational corporations, the auto parts industry is actually a larger employer in Ontario. I returned to Windsor to visit one of the many family-owned businesses that make up much of the parts industry, as well as workers at parts plants.
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Canada joined Britain and France in condemning Israel’s expansion of the Gaza war. “We have always supported Israel’s right to defend Israelis against terrorism,” the joint statement by the three countries said. “But this escalation is wholly disproportionate.”
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Sales of overstocked and returned merchandise are booming, Ken Belson reports. And the “Godfather of Returns” is Sender Shamiss, a gregarious Toronto native.
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An underwater drone named Rhody is being used to map some of the dozens of sunken vessels in Lake Ontario.
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In The Athletic: Daniel Nugent-Bowman writes that history suggests that the Edmonton Oilers can rebound from their Game 1 loss in the Stanley Cup Western Conference finals against the Dallas Stars. (Game 2 was played Friday night after the Canada Letter’s deadline.) And Hailey Salvian explains how the Ottawa Charge went from the bottom of the Professional Women’s Hockey League to becoming a team that’s two victories away from winning the league’s championship Walter Cup.
Ian Austen reports on Canada for The Times based in Ottawa. He covers politics, culture and the people of Canada and has reported on the country for two decades. He can be reached at [email protected].
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Ian Austen reports on Canada for The Times based in Ottawa. He covers politics, culture and the people of Canada and has reported on the country for two decades. He can be reached at [email protected].
The post Canada’s Central Banker on Economic Turmoil and Diversifying Trade appeared first on New York Times.
