BoC's Macklem Flags Tariff Risks, Urges Trade Diversification

Bank of Canada Governor Tiff Macklem said the central bank is intensifying its monitoring of tariff effects on the economy and has added new questions on trade barriers to its household and business surveys. The outreach aims to gauge how recent duties are shaping prices, supply chains and investment decisions across the country. Macklem cautioned that monetary policy will need to incorporate tariff risks to prevent a “tariff problem” from becoming an inflation problem. He reiterated the bank’s commitment to keeping price growth on target and indicated that officials are prepared to adjust settings if protectionist measures start to push costs higher. Beyond managing near-term price pressures, Macklem urged policymakers and businesses to broaden Canada’s trade relationships beyond the United States. Diversifying export markets, he said, would reduce the economy’s vulnerability to external shocks and support more stable long-term growth.