Bank of Canada Warns There Might Be Tough Times Ahead

The economic and personal challenges we face with a US trade war, writes Peter Watson.

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

There could be tough times ahead.

The Canadian economy would weaken, inflation would rise, and the BOC normal monetary policy options would not be able 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 US and much of its sales are to the US.

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

We spoke of his decision to move at least some of his Canadian operation to their United Sates location. This for many reasons was not an option he would enjoy.

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

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

Peter Watson, of Watson Investments MBA, CFP®, R.F.P., CIM®, FCSI offers a weekly financial planning column, Dollars & Sense. He can be contacted through www.watsoninvestments.com