Bank of Canada Governor Says Canada Delayed Reducing U.S. economic Dependence
OTTAWA – The head of the Bank of Canada says the country waited too long to reduce its economic dependence on the United States and is paying the price today.
Governor Tiff Macklem was in Saskatoon Tuesday giving a speech about global trade disruption to Saskatchewan business leaders.
He warned that U.S. President Donald Trump’s tariffs have hit trade-sensitive industries hard in Canada and put economic growth on a permanently lower trajectory.
To break free of its reliance on the U.S. economy, Macklem argued that Canada needs to develop new global markets for its products and knock down the internal barriers hampering productivity.
He drew a comparison to the 2008-09 global financial crisis and the spillover effects a U.S. collapse at the time had on Canada.
“Everyone talked about diversification then, too. but not much happened,” Macklem said in his speech.
Macklem told reporters after his speech that Canadian businesses lost “urgency” when the recession faded away and U.S. demand returned.
The United States will likely always be Canada’s largest trading partner, he said.
But Macklem also said that Canada and the U.S. aren’t going through a “cyclical downturn” this time, and there won’t be a bounceback in growth unless business leaders and policymakers take action to restructure parts of the economy.
“This time, we need to follow through,” he said.
The Bank of Canada lowered its benchmark interest rate by a quarter point to 2.5 per cent last week as signs of weakness in the economy shifted the risks away from rising inflation.
Real gross domestic product fell in the second quarter of 2025 as Canadian exports tanked; Canada’s labor market is also showing cracks, notably in tariff-struck industries.
Exemptions under the Canada-U.S.-mexico agreement are shielding most Canadian goods from U.S. tariffs,though sector-specific duties on steel,aluminum,autos and softwood lumber are hurting those industries. Macklem noted China’s tariffs on Canadian canola.