From Global News.

On Thursday, Bank of Canada Governor Tiff Macklem, in the bank’s annual Financial Stability Report, said a prolonged trade war could increase the risks to Canadian financial stability by hurting banks and other institutions, making it harder for households and businesses to pay down debt.

“A long-lasting trade war poses the greatest threat to the Canadian economy. It also increases risks to financial stability,” Macklem said.

He said he was confident that the banking sector was “well positioned to withstand a severe shock”, but the impacts of tariffs slapped by U.S. President Donald Trump on Canada and Ottawa’s subsequent counter-tariffs could hurt financial stability, especially if it continued for a long period of time.

He added that with the onset of the US trade war, trust has been broken between the two countries and Canada is “not going to get that all back right away.”

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