Macklem: Tariffs, trade, employment and inflation

It’s a pleasure to be here in Newfoundland and Labrador. I want to thank the St. John’s Board of Trade for the invitation to speak to you today. There is no better place to talk about trade than a community of exporters. The sea routes that begin and end in St. John’s have helped feed, supply and build Canada and the world. Port cities are attuned to global commerce. And until recently, the global economy had been recovering well from the hard years of the pandemic. Canada, a country that depends on foreign trade, was benefiting. At the end of 2024, inflation in Canada had been close to the 2% target for months. Substantial interest rate reductions had boosted household and business spending, and exports were strengthening. The economy had renewed momentum. But then something happened. Since President Trump took office in January, the world has faced a dramatic escalation in tariffs and pervasive uncertainty. In Canada, trade has been disrupted and jobs have been lost. Businesses have re-evaluated their investment plans. Consumers have become more cautious. And Canadians have told us that they expect higher prices for many imported goods. The recent announcement that Canada and the United States agreed to negotiate a new economic and security relationship within 30 days is very welcome news. Restoring open trade between our countries is critical to jobs and growth in Canada. It is also important for prices and inflation. Today I want to talk about the eff BoC's Gov. Macklem: The prospect of a new Canada-US trade deal offers hope that tariffs will be removed. BoC's Gov. Macklem: Cutting rates would be more difficult if the recent firmness in underlying inflation persists. BoC's Gov. Macklem: The Bank of Canada are proceeding carefully with monetary policy. BoC's Gov. Macklem: Rate cut could be needed if effects of US tariffs and uncertainty continued to spread through the economy and cost pressures on inflation were contained.