Prime Highlights

• Bank of Canada Governor Tiff Macklem has referred to the Canada–U.S. trade and security pact as “welcome news” for economic stability.
• The pact is predicted to reduce uncertainty around trade and aid Canada’s battle to reduce inflation.

Key Facts

• The pact deepens cooperation between nations on trade, supply chains, security, and investment.
• Macklem stressed that reduced uncertainty with the United States is pivotal to Canadian jobs and growth.

Key Background

Bank of Canada Governor Tiff Macklem has welcomed a newly signed Canada–U.S. deal on trade, investment security, and economic co-operation as “good news” for the nation’s economy. In making public comment on the issue, Macklem reiterated that strong bilateral relations with the U.S. are preconditions for Canada’s economic rise in the coming period.

The agreement is targeting a wide range of industries—reshaping supply chains, raising the security of cross-border investment, and enhancing bilateral technological collaboration. For Canada’s number one trading partner, the agreement could temper inflationary pressure fueled by international supply disruption and unstable trade policy. Macklem reiterated that secure and predictable trade relationships form the pillars of business confidence and support job security.

As protectionism and geopolitical instability confront the world, Macklem believes that such compacts restore predictability. According to him, if businesses and consumers understand what occurs in trade policy, then investing, planning, and pricing become easier. It matters most, he said, since the Bank of Canada is struggling to contain inflation, which remains above target levels.

To that degree, Macklem also cautioned that if uncertainty in trade with the US was not reversed, it would have put jobs and domestic growth at risk. His comments support the central bank’s case that monetary policy alone can’t assure economic stability—good and benign trading conditions are also necessary. The deal is a clear pledge by the two nations to economic security, which can have a positive influence on market behavior and investor mood.

As a deal, the security and trade agreement is not merely being regarded as a diplomatic achievement but as a macroeconomic stabilizer as well. Macklem’s approval is conveying the message that the less the disruption in commerce, the less turbulent can inflation ease off, and long-run economic growth can be maintained.