Governor Tiff Macklem outlines four megatrends that are transforming the global economic and financial landscape. He also talks about the structural reform needed to ensure Canada’s long-term prosperity.
Watch Governor Macklem speak to the Saskatchewan Trade and Export Partnership and the Saskatoon Chamber of Commerce by webcast. Read the full speech.
Four transformative forces—or megatrends—have led to increased uncertainty, changing trade relationships, reduced global demand and less efficient global supply.
US tariffs are at the highest level they’ve been since the early 1930s. In this context, countries are putting up more barriers to trade. And trade with the United States has dropped, leaving exporting countries to actively look for new trade partners.
For the past 25 years, the United States dominated the global trade system, but today China and the European Union have grown in importance. China’s manufacturing and high-tech sectors are now competing head-to-head with the United States and other countries. On top of that, Chinese companies also benefit from government policy that uses trade for state-directed growth, which means they have an advantage over foreign competition.
Even though the United States no longer dominates global trade, US Treasuries are still seen as the global risk-free asset. And the US dollar remains the global reserve currency even though it has depreciated recently. Recent US policy moves have shaken global confidence in the US dollar as a safe haven.
The United States has faced a persistent trade deficit, but China and the European Union have experienced large and continuing surpluses. When imbalances such as these accumulate without being addressed, it leads to increased risk to the global financial system. That’s what happened in the lead-up to the 2008–09 global financial crisis, and that’s why we need to monitor these persistent imbalances.
Economies around the world are showing clear signs of slower growth. Many countries are looking for new trading partners. And governments are changing domestic policies and regulations to allow for freer trade within their own borders.
But there is still more to do. On the international scale, the problems of unbalanced trade must be addressed. Multilateral organizations need to closely monitor risks to the global financial system. And increasingly, companies will need to consider geopolitical risks and the resilience of their supply chains when making business decisions.
Canadian leaders—business, political and economic leaders—need to chart a new course. We should have been making these changes 15 years ago. But the next best time is now.”
Canadian exports dropped sharply in the second quarter of 2025, and the economy slowed. Production is falling in industries affected by tariffs. Unemployment was 7.1% in August. Many businesses have told us they have paused investment plans due to the elevated uncertainty about US trade policy.
Monetary policy can’t reverse the damage caused by the ongoing trade conflicts. But structural reform could help improve Canada’s productivity and competitiveness, including measures such as:
Elbows up has been galvanizing, but now we need to roll up our sleeves. There is a lot of hard work to do.”
Watch Governor Macklem answer questions from the media following his speech.
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