Canadian Prime Minister Says He Has Spoken with Trump and Will 'Accelerate Negotiations'; Canadian Provinces Refuse to Lift U.S. Alcohol Bans

U.S. Treasury Secretary Scott Bessent criticized Canada on Tuesday in an interview, accusing it of 'serious discriminatory practices' against U.S. dairy and alcoholic beverages, and characterizing the new U.S. tariffs as 'a proportionate countermeasure against Canada’s actions harming U.S. businesses.' Yet provincial premiers remain largely unmoved. British Columbia Premier David Eby, speaking in Charlottetown, stated unequivocally: 'U.S. alcohol will absolutely not return to store shelves.' Provincial leaders are currently gathered in Charlottetown for a meeting. Saskatchewan Premier Scott Moe adopted a relatively moderate stance, saying provinces would need to assess any federal request independently—but emphasizing that 'the federal government sits at the negotiating table.' Currently, Saskatchewan and Alberta still permit the sale of U.S. alcohol through government-run liquor stores. International trade lawyer Mark Warner described provincial alcohol bans as 'legally unsupported' and 'a rather blunt instrument.' He noted that lifting the bans would have limited real economic impact—and could even help advance trade negotiations: 'If Canadians aren’t buying U.S. bourbon or California wine in the first place, the ban is unnecessary—putting the bottles back on shelves won’t change demand.' Expanded Tariffs Further Dampen Investment Recovery Expectations The new U.S. tariffs directly target Canadian packaged goods, textiles, and horticultural products. The U.S. cites Canada’s 'unfair treatment' of U.S. alcohol, automobiles, and dairy as justification. More notably, Washington explicitly stated these newly targeted goods will *not* be exempt under the U.S.-Mexico-Canada Agreement (USMCA)—marking a clear departure from previous Trump-era practice, where USMCA-compliant goods were often spared. Earlier this month, the U.S. declined to renew the USMCA with Canada and Mexico. For Canada’s economy—already strained by years of trade uncertainty—this timing is especially adverse. Jeremy Kronick, CEO of the Canadian think tank C.D. Howe Institute, told reporters that such 'erratic, volatile' trade conditions make long-term planning difficult for Canadian firms: 'Even if an agreement is reached tomorrow, we can’t be sure whether it’s truly durable—or merely temporary.' Bank of Canada Governor Tiff Macklem recently signaled cautious optimism, noting businesses are adapting to ongoing trade turbulence; Deputy Governor Carolyn Rogers also commented on the Carney government’s efforts to advance projects including the West Coast pipeline…

Bank of Canada Holds Rates Steady for Seventh Time—but Leaves the Door Slightly Ajar for a Hike

What the Decision Said On September 2, the Bank of Canada announced it would hold its overnight rate target steady at 2.25%, with the bank rate at 2.50% and the deposit rate at 2.20%. This marks the seventh consecutive hold since its last cut on October 29, 2025 (effective the following day). The statement noted that the economy and inflation are 'broadly evolving in line with the projections outlined in the July Monetary Policy Report (MPR),' and thus the Governing Council agreed to maintain the current rates. However, two key wording changes appeared: due to the ongoing Middle East conflict and limited progress toward reopening the Strait of Hormuz, 'upside risks to the inflation outlook have increased'; and the new U.S. tariffs—as well as Canada’s retaliatory tariffs—'will raise costs for some businesses and may, over time, feed through to consumer prices.' Derek Holt, economist at Scotiabank, pointed out that the phrase 'the current policy interest rate remains appropriate,' used in the July statement, has now been removed—indicating the Bank has 'clearly cracked the door open.' Should incoming data support it, a tightening move could become possible as early as the next meeting. Holt’s 'cracked door' observation rests on three data points. Statistics Canada reported on August 28 that real GDP grew 0.8% quarter-on-quarter in Q2, annualized at 3.3%—above the Bank’s July MPR forecast of 2.5%. Q1 growth was revised upward from 0.0% to 0.1%; according to Desjardins Group’s annualization, this shifts from −0.1% to +0.3%. The July CPI rose 3.0% year-on-year, driven heavily by gasoline prices (+25.7% y/y); excluding gasoline, core inflation remained at 2.2% for the third consecutive month. The Bank’s three core measures stood at: CPI-trim (trimmed mean) at 1.9%, CPI-median at 2.0%, and CPI-common at 2.7%. The unemployment rate fell to 6.4% in July. According to CBC, Governor Tiff Macklem said during his press conference that 3% inflation is 'too high'—and 'heavily concentrated in gasoline and oil prices'; while retaliatory tariffs 'will increase costs,' their current inflationary impact is assessed as 'fairly modest,' with the Middle East posing 'the bigger concern.' The next decision is scheduled for October 28, alongside the release of a new Monetary Policy Report. First, consider the bearish case: the rebound is broad-based, core…

Bank of Canada Holds Interest Rates at 2.25%, Cites Oil Price Risks

Apr 29, 2026

The Bank of Canada maintained its policy rate at 2.25%, warning that sustained high energy prices could necessitate future rate hikes to control inflation.

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