Macklem warns tariffs and oil prices threaten Canadian recovery
Speaking in Halifax on September 21, 2026, Bank of Canada Governor Tiff Macklem warned that renewed US tariffs and elevated global oil prices threaten to stall economic growth while keeping headline inflation near 3 percent.
Export rebound confronts fresh tariffs
Canadian firms adapted to structural headwinds in the second quarter of 2026, pushing non-energy exports up by 14.5 percent and lifting annualized business investment by 8.8 percent.
Furthermore, Statistics Canada reported that nearly one in five businesses adopted artificial intelligence tools over the past year.
However, renewed trade friction with the United States now threatens this recovery.
With negotiations breaking down, new US tariffs affect approximately 5 percent of Canadian goods exports to the United States.
Governor Tiff Macklem noted that these trade barriers risk reducing fourth-quarter economic growth to below 1 percent by delaying hiring and corporate investment decisions.
Refinery strains and hundred-dollar oil
Simultaneously, the conflict in the Middle East has disrupted shipping routes and damaged global refining capacity, keeping crude oil near $100 per barrel.
Macklem explained that refined fuel costs reflect price pressures equivalent to an oil price nearly US$40 higher than actual market levels.
Consequently, annual inflation has hovered around 3 percent in recent months.
To assess these diverging shocks, the Bank of Canada is deploying a new forecasting model named Prima ahead of its October policy report.
Caught between two fires
The Bank of Canada faces a severe policy dilemma between imported inflation and slowing export growth.
Looking through elevated energy prices remains defensible only while second-round effects stay muted.
Deeper tariff friction leaves policymakers unable to cushion growth without sacrificing price stability.
Source: Navigating uncertainty and adapting to change
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