People Mentioned
Special Advisor, Ottawa
Canada breathed a collective sigh of relief when U.S. President Donald Trump’s threatened 25% tariffs were paused for 30 days. But Stephen Poloz, Osler Special Advisor and former Governor of the Bank of Canada, tells BNN Bloomberg that the ongoing trade tensions are discouraging businesses from investing in Canada, making it more difficult to shore up an economy that is already weak. If such tariffs are eventually implemented, Stephen says, Canada would be ill prepared to handle them.
“We’ve been in a weak spot for pretty well two years now. It’s been masked by high immigration flows, which kind of buries the data,” he says.
“With household spending per household shrinking for the last two years, and we still have quite a lot of people to renew their mortgages… investment’s been really low for a long time, housing’s been weak, everything’s been weak.”
With the lingering threat of tariffs, companies and institutional investors — both domestic and international — are hesitant to commit capital to projects in Canada. In the not-too-distant past, the country faced similar challenges: “In fact, what happened during Trump’s first term is a lot of Canadian investment funneled south.”
Tax incentives introduced by the previous U.S. administration are another reason why businesses are more eager to invest south of the border.
“People have told me, ‘Show me a mid-cap company with great characteristics in Canada, and show me the same company in the U.S. I’m going to bet on the U.S. one, just because of the environment that they’re in.’ Do we have that business-friendly environment that we aspire to? No.”
Yet there are tools and policy options available to incentivize investment in Canada, he says, “which will give us the platform for future growth and future resilience in the economy.”
“What I’m talking about is incentivizing investment… If you give somebody a fish today because they’re in a tough spot, tomorrow you need to give them another one. But if today you give them a fishing rod, then they’re taken care of.”
“What we need to do to…is make sure that we’re making big bets on the future. And households don’t do that; it’s the companies.”
You can watch Stephen’s interview and read the full article on the BNN Bloomberg website.
People Mentioned
Special Advisor, Ottawa
