Canada’s economy managed a soft landing. That might not last, warns Macklem

Speaking in Calgary, Bank of Canada governor Tiff Macklem said that while the Canadian economy entered 2025 on strong footing, the outlook for the year is not rosy.

The uncertainty Canada faced during U.S. President Donald Trump‘s first term “doesn’t come close” to the current uncertainty around his tariffs, Bank of Canada governor Tiff Macklem said Thursday.

Speaking at an event in Calgary, Macklem said that while the Canadian economy entered 2025 on a strong footing after years of COVID-19 disruptions and inflation, the outlook for the year is not rosy.

“The Canadian economy managed a soft landing. Unfortunately, we’re not going to stay on the tarmac for long,” he said.

Macklem said Trump’s first term in office created uncertainty in the relatively stable trading relationship between the U.S. and Canada. However, his second term is causing far more.

“After more than 50 years of high predictability in trade policy, there was a sharp increase in uncertainty during President Trump’s first term in office. But that uncertainty doesn’t come close to what we see now,” he said.

Macklem said depending on the duration of the tariffs, the impact could be “severe,”  adding that the uncertainty is already harming business investment in Canada.

He also raised concerns over threats to Canada’s sovereignty.

“Most disturbing of all for Canadians, President Trump has threatened our sovereignty, repeatedly referring to Canada as the 51st state. There can be no question about our sovereignty or our border,” he said.