Bank of Canada issues warning to Canadians #CanadaFinance

Recently, Bank of Canada Governor Tiff Macklem spoke about the significant dangers to the Canadian economy if we have a trade war with the U.S.

There could be tough times ahead.

The Canadian economy would weaken, inflation would rise, and the BOC’s normal monetary policy options would be unable to correct these hardships. Our standard of living would decline, and inflation would increase, so things will be even more expensive than they are today.

Macklem spoke to a joint meeting of the Mississauga and Oakville Board of Trade. The event was very well attended. Business owners and executives wanted to learn more about the potential economic dangers ahead.

Macklem spoke of the added risk to Canada because of our weak financial position. Government and household debt is high. We have less ability to sustain financial hardship.

One conversation I had with a business owner put the economic challenges into a personal perspective. Their business has three locations, two in Canada and one in the U.S. and much of its sales are to the U.S.

Tariffs on his products would increase the cost to his American customers; therefore, sales would decline or potentially stop, which would be a financial blow. His company would lose money and staff would lose their jobs.

We discussed his decision to move some of his Canadian operations to their United States location. This, for many reasons, was not an option he would enjoy.

The United States and Canada are different countries. Different values, attitudes and the recent explosion of Canadian pride is grounded on our love of our country.

A trade war will hurt us economically and, for many, emotionally.

Watson Securities (www.watsoninvestments.com) is a trade name of Aligned Capital Partners Inc. (ACPI). ACPI is regulated by the Investment Industry Regulatory Organization of Canada (www.iiroc.ca) and a member of the Canadian Investor Protection Fund (www.cipf.ca). Watson Securities is registered to advise in (securities and/or mutual funds) to clients residing in Ontario. This publication is for informational purposes only and shall not be construed to constitute any form of investment advice. The views expressed are those of the author and may not necessarily be those of ACPI. Opinions expressed are as of the date of this publication and are subject to change without notice and information has been compiled from sources believed to be reliable. This publication has been prepared for general circulation and without regard to the individual financial circumstances and objectives of persons who receive it. You should not act or rely on the information without seeking the advice of the appropriate professional.