Bank of Canada Warns Trump Trade Policies Erode US Dollar Stability

Bank of Canada Governor Tiff Macklem has expressed concerns over the weakening US dollar and the potential risks to Canada’s economy, emphasizing the need for Canada to pursue a more independent economic course away from the US. Macklem pointed out that President Trump's trade policies and attempts to influence the Federal Reserve are raising questions about the independence of US monetary policy and the US dollar's traditional role as a global safe-haven asset. The US dollar's decline and the uncertainty surrounding US dominance in global financial flows have prompted Canadian leaders to seek new markets and address structural vulnerabilities in their economy. Despite these challenges, Macklem believes the US dollar will remain the global reserve currency for the foreseeable future. The increased leverage in the financial system due to hedge fund purchases of US government debt also presents systemic risks. Overall, Macklem suggests that Canadian policymakers and business leaders need to prepare for deeper structural changes as the economic relationship with the US evolves.