Scotia, BMO CEOs say Trump’s latest tariffs are manageable, urge Ottawa to accelerate economic change

Trump's trade threats should encourage Canada to make changes in its own economy, say bank CEOs. Photo by HYUNGCHEOL PARK/Postmedia)

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The heads of two of Canada’s largest banks say that United States President Donald Trump’s latest tariffs and threats should further encourage Ottawa to break down interprovincial trade barriers and accelerate the growth of key energy projects.

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Both Darryl White, chief executive of the Bank of Montreal and Scott Thomson, CEO of the Bank of Nova Scotia, said on Tuesday that while the impacts of the latest tariffs would create some uncertainty, they were manageable.

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“I think it is important to remove the emotion from the topic and have a clinical lens,” White said on a call with analysts. “There is an opportunity for the Canadian federal and provincial governments to recognize the moment for what it is and use it to drive transformational policy change… and not let this moment go to waste.”

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Trump imposed 50 per cent tariffs on billions of dollars’ worth of Canadian goods last weekend after the two countries failed to agree on a trade deal. The tariffs are expected to impact five per cent of Canada’s annual exports to the U.S.

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The U.S. president has also threatened to double tariffs on some autos from Canada from next year onwards. Prime Minister Mark Carney, meanwhile, has vowed to enforce retaliatory tariffs.

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In order to reduce its reliance on the U.S. the federal government created the Major Projects Office last year, an agency that focuses on speeding up the building of key projects that are likely to boost Canada’s economy.

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For example, Ottawa approved the construction of a nickel mine in Ontario last month that’s expected to be the largest nickel sulphide operation in the west. Nickel is a key metal that’s used to build stainless steel and batteries of electrical vehicles.

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Mark Selby, who heads the company running the project, said last month that the federal government’s approval took a fraction of the time required by most big mining projects.

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Both White and Thomson believe that the latest tariffs suggest that the government needs to continue taking steps like these.

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“We should use this moment to accelerate further the prime minister’s agenda,” Thomson said. “(By) getting big things done and continuing to diversify trade while also continuing the great trade relationship we have with the United States … Of course, there’s uncertainty, but it does feel like a manageable force to get through as a country.”

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Thomson also said that the impact of the latest tariffs on the country’s gross domestic product is expected to be small, and that support from the government could help lessen the blow.

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White said that the Canada-U.S. relationship has been going through a period of adjustment and that some of the assumptions that businesses have relied on for decades have been tested in the last year and a half.

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“We are closely monitoring the effect on our clients and our portfolios and we are working with them on liquidity investment decisions, supply chain adjustments and market diversifications,” he said.

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BMO relies on its U.S. business segment for about 40 per cent of its earnings.

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