By Randy Thanthong-Knight
(Bloomberg) — Bank of Canada Governor Tiff Macklem suggested the U.S. dollar’s status as a “global safe asset” may be hurt by President Donald Trump’s trade policies.
In a speech Tuesday, Macklem said global investors are considering whether U.S. dominance in global financial flows will ebb as the world’s largest economy pulls back from global trade and runs large fiscal deficits.
“Providing safe assets to the world has its benefits. The United States can borrow money to finance growing fiscal deficits at a lower rate than it could otherwise,” Macklem said in prepared remarks of a speech in Saskatoon, Saskatchewan.
But “President Trump’s ‘Liberation Day’ shook global confidence,” Macklem said, referring to the president’s April 2 announcement the the U.S. would put new tariffs on dozens of trading partners.
Investors would have expected tariffs to support the U.S. currency, but instead the greenback has depreciated while the price of gold has risen, Macklem said. With the dollar weakened by about 10% against other major currencies since the start of the year, its “safe-haven role was called into question,” he said.
“It’s too early to know if this is the start of a new era,” the governor said. While the greenback will likely remain the global reserve currency for the foreseeable future, “for many, its value as a hedge in times of stress has been dented.”
Trump’s attempts to influence the Federal Reserve are also “raising questions about the continued independence of U.S. monetary policy,” Macklem said.
The governor warned that shifts in trade affecting international capital flows, “unsustainable” U.S. fiscal deficits, and persistent trade imbalances have the potential to increase financial stability risks.
“The U.S. has swerved sharply to protectionism,” he said. “The large increase in U.S. tariffs is weakening global demand, disrupting supply chains, raising prices and putting the Canadian and global economies on permanently lower paths.”
As a trading nation where exports account for about a third of the country’s income, Canada is under threat. Macklem urged governments and business leaders to tariff-proof the economy in ways that monetary policy can’t do.
“Increased trade friction with the U.S. means our economy will work less efficiently, with added costs and less income,” Macklem said. “There is no better time than now to deepen investment, improve productivity and expand our market.”
His proposals include increasing interprovincial trade and finding new overseas markets, attracting investors by shortening the project approval process — something Mark Carney’s government has pledged to do — and reducing regulatory uncertainty. Macklem said Canada needs to leverage existing trade agreements with 50 countries beyond the U.S.
“Canadians have embraced the power of economic patriotism — elbows up,” Macklem said, referring to a hockey term that has become synonymous with the Buy Canada movement since the U.S. tariff war began. “But now we need to roll up our sleeves and do the hard work to be more competitive.”
–With assistance from Erik Hertzberg and Mario Baker Ramirez.
©2025 Bloomberg L.P.
Visited 16 times, 16 visit(s) today
Bank of Canada Bank of Canada Governor Tiff Macklem bloomberg currency Donald Trump federal reserve greenback speech Tiff Macklem speech USD
Last modified: September 23, 2025