Canada's Economic Growth at Risk from Tariffs and Oil Prices

Bank of Canada Governor Tiff Macklem has sounded an alarm about potential growth risks in Canada's economy, citing trade tensions and rising oil prices.

Macklem made his comments at a speaking engagement in Nova Scotia on September 21. He noted that Canada's non-energy exports rose 14.5% annually in the second quarter of 2026, their highest level since early 2025.

However, trade tensions and elevated oil prices have created challenges for the economy. If US tariffs remain in place, the Bank of Canada estimates fourth-quarter GDP growth could be roughly halved to below 1%. Global oil prices are currently near $100 per barrel, which is expected to drive inflation above target.

Macklem emphasized that monetary policy has limits and cannot offset tariff effects or control global energy prices. However, he noted that the Bank of Canada will adjust its policy as needed in response to evolving risks.