Canadians should brace for lasting economic consequences from the ongoing tariff dispute with the United States, according to Bank of Canada Governor Tiff Macklem, who warned Thursday that the erosion of trust between the two countries could leave permanent scars on the economy.“I do think there will be some permanent effects because, yes, trust has been broken to some degree and we’re not going to get that all back right away,” said Macklem during a press conference. Blacklock's Reporter said while he acknowledged that some changes were overdue — such as diversifying trade partners and improving Canada’s internal economic infrastructure — he emphasized that the damage goes beyond temporary policy shifts..Macklem said the uncertainty brought by the trade war should prompt both policymakers and financial institutions to prepare for potential turbulence. “You put your gloomy hat on, you really get gloomy,” he remarked, highlighting the importance of being vigilant and realistic about the risks ahead.The Bank of Canada’s latest Financial Stability Report cautioned that a prolonged global trade war would be "highly disruptive," though it would likely not threaten the core strength of the banking sector. .However, the report warned that mortgage delinquencies — those in arrears by at least 90 days — could rise to levels seen during the 2008 global financial crisis.Despite the concerns, Macklem expressed confidence in the resilience of Canada’s financial institutions. “Yes, we are confident the banking sector is well positioned to withstand a severe shock,” he said.Canada has not experienced a significant bank run since the collapse of Alberta’s Canadian Commercial and Northland banks in 1985, an event that cost the Deposit Insurance Corporation $608 million. Additional failures during the 1980s, including 36 mortgage and trust companies, left a $1.25 billion deficit. The last uninsured bank to fail in Canada was the Home Bank of Toronto in 1923.
