Speaking at a conference in Mexico City, BoC Governor Tiff Macklem raised concerns over the economic uncertainty stemming from U.S. President Donald Trump’s tariff threats. He noted that “threats of new tariffs are already affecting business and household confidence, particularly in Canada and Mexico.”
“The longer this uncertainty persists, the more it will weigh on economic activity in our countries,” he warned.
Macklem stressed that central banks face a challenging task in managing the economic fallout. He explained that policymakers cannot counteract both “weaker output” and “higher inflation” simultaneously.
The challenge will be to assess the downward pressure on inflation from reduced economic activity while balancing it against the upward pressure from higher input costs and supply chain disruptions caused by tariffs.
