For the first time in 18 months, Tiff Macklem, Governor of the Bank of Canada, returned to the city for a speech, in what has ended up being yet another crisis time for Canada’s economy.

Macklem’s speech in 2023 focused on the then inflationary crisis the country was undergoing at the time, and although he said that the Bank of Canada would continue to confidently maintain its commitment to price stability, economic uncertainty was the order of the day.

“The Canadian economy managed a soft landing. Unfortunately, we’re not going to be on the tarmac for very long. We now face a new economic crisis since President Trump again threatening to impose a wide range of tariffs on Canadian exports, uncertainty has increased sharply, and depending on the extent and duration of tariffs, economic impact could be severe,” Macklem told a Calgary crowd.

“The uncertainty is already causing harm. There’s a lot we don’t know.”

So much so, he said, that the BOC’s governing council had issued a range of economic projections for the nation addressing possible outcomes for the economy rather than a central projection.

“I don’t think anybody at the governing council can have very high conviction about what the most likely outcome is. So we’re really looking at setting policy to deal with a range of outcomes,” Macklem said.

He said the main message was that Canada needed to work on being flexible and adaptable to how the economic uncertainty settles out.

The long-term effects of that uncertainty, brought on by a trade war initiated by the United States, were likely to mean weaker economic growth and higher inflation overall despite downward pressure on inflation because of that weaker growth.

Structural changes needed to address tariff war

Macklem said Canada is poised to address those challenges through positive structural changes in the Canadian economy.

“You know, sadly, in some cases, it’s been easier to trade more south than it has across the country. There are too many small differences in regulations across the country. There are actual trade restrictions, and there are also a lot of restrictions on accreditations for different professionals,” he said.

“If we can cut through these, mutually recognize our regulations we could make it easier for commerce to happen east, west, across the country, that will be a positive structural reform that could offset at least some of the consequences of this very negative structural replacement with the United States.”

Brad Parry, CEO of Calgary Economic Development, said that no one is going to win a trade war, and those impacts that Macklem mentioned would affect both consumers and businesses.

He said that from his Q&A with Macklem, there weren’t any surprises but it was important for the Calgary business community to hear firsthand from the Governor.

“I think he brought some interesting perspective. I think he helped explain how the Bank of Canada works and how they can help hedge that spike and drop,” Parry said.

“What I was even more encouraged about was hearing their move to new data sources. They want to get more data, faster data, better data, to be able to make those decisions. But I was also pleased to hear the honesty saying that we’ve got to shorten our time horizons as we look at the impact. So for us, that’s positive signaling that we can start to use in our conversations with clients as well.”

Parry said within the city, the economic uncertainty has already led to changes in how businesses are making decisions, or lack of decisions.

“You can’t make it. The environment is changing, not just by the day, but by the hour, and so how do you plan for your products? How do you plan for your teams? How do you plan for long term? That’s what hurts us the most, is seeing these businesses be in this state of flux and not be able to make some decisions going forward,” Parry said.

“But we’re encouraged to hear the governor talk about trying to cap inflation, keep inflation under control, to help keep that price pressure down for as long as we can.”

Calgary Economic Development is set to provide its annual report to the community on April 2.