Evidence of meeting #37 for Finance in the 45th Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was productivity.
A video is available from Parliament.
Bloc
Jean-Denis Garon Bloc Mirabel, QC
Do the figures in this report include the 6 April executive order?
Bloc
Jean-Denis Garon Bloc Mirabel, QC
I'm referring to the executive order where Donald Trump imposed a flat 25% tariff on products containing more than 15% steel or aluminum by weight.
Governor, Bank of Canada
Yes, everything is captured in the report, including copper and the auto sector.
A look at exports in sectors that have been highly affected by U.S. tariffs shows that exports have declined significantly.
Bloc
Jean-Denis Garon Bloc Mirabel, QC
Beyond the average rate, do you know what percentage of exports are now subject to the 25% tariff?
Governor, Bank of Canada
I don't have the figures with me.
The vast majority of Canadian exports are not subject to tariffs. With the exception of sectors that have been heavily impacted, CUSMA continues to apply to other sectors, and this is very important. More than 90% of Canadian exports continue to attract no tariff, but I don't have the exact figure.
Bloc
Jean-Denis Garon Bloc Mirabel, QC
I understand that Quebec and Ontario have been hit harder. Is that correct?
Governor, Bank of Canada
Yes. It's clear that Ontario and Quebec have been hit harder than the other provinces because the softwood lumber, auto, steel and aluminum sectors are key sectors in these provinces.
Bloc
Jean-Denis Garon Bloc Mirabel, QC
In the monetary policy report, you obviously mention the rise in oil prices, which, at the very least, affect regions differently.
First, Canada is a net oil exporter, so obviously, oil-exporting regions are benefitting from this increase, and that is to be expected.
Second, because oil is an input, there is a short-term productivity shock. This is also reflected in the price at the pump, and therefore on household expenditures.
Does the Bank of Canada feel that some regions benefit from Canada's reliance on oil—which is used as an input and in passenger transport—and that others are paying the price?
Governor, Bank of Canada
That is always the case. When oil prices go up or down, this has an impact on sectors of our economy. This is nothing new, it has always been like that.
The Bank of Canada can't target one sector or one province, because we only have a single rate of interest for the entire country. However, it's very important for us to understand what is happening in every region and every sector, and that's why we have regional offices throughout the country.
Bloc
Jean-Denis Garon Bloc Mirabel, QC
For instance, when you try to understand short or long-term impacts of the rise in oil prices on economic growth, what are the major regions of Canada that are gaining something, and which regions are paying more?
Governor, Bank of Canada
When oil prices are higher, the major oil-producing provinces, including Alberta and some Atlantic provinces, gain more.
The reverse happens when prices go down.
Bloc
Jean-Denis Garon Bloc Mirabel, QC
We're constantly wondering whether Canada should produce more oil or turn to other types of energy where possible.
Do you think that in the long term, reducing our dependency on oil in production processes and transport would mean that this sort of imbalance between Canadian regions, which has asymmetrical impacts when oil prices go up, would be mitigated?
Governor, Bank of Canada
Energy policies are really not in the Bank of Canada's purview, but…
Governor, Bank of Canada
… there are several advantages to having more diverse and greener sources of energy.
Bloc
Jean-Denis Garon Bloc Mirabel, QC
That means you do take them into consideration. I'm not asking you to make a decision.
In any case, my time is up. The Chair is giving me a stern look, so we'll come back to this when I have another turn. Thank you.
Liberal
The Chair Liberal Karina Gould
Thank you, Mr. Garon.
You have the floor for five minutes, Mr. Lefebvre.
Conservative
Éric Lefebvre Conservative Richmond—Arthabaska, QC
Thank you, Madam Chair.
Governor and senior deputy governor, thank you for joining us today.
Governor, right from the outset, you told us about inflation, which can range from 1.8% to 2.4%. You spoke about the increase in gasoline prices and the cost of food. You also said that this inflation should not be left to become persistent.
Do you feel that the pressure related to the cost of living in 2026 is higher than it was in 2015?
Conservative
Éric Lefebvre Conservative Richmond—Arthabaska, QC
In the report, you speak about uncertainty around CUSMA. You noted that if nothing happens, the agreement will remain in place.
If there are no negotiations, do you think that the current agreement will be extended and there will be no change?
Governor, Bank of Canada
If there are no negotiations, nothing will change and the agreement will continue to be in effect. It does not expire in summer. I'm not sure of the exact date, but I believe the agreement will continue to be in effect until 2030.
The agreement will be reviewed this summer, not abandoned.
Conservative
Éric Lefebvre Conservative Richmond—Arthabaska, QC
Do you think the U.S. will comply with the agreement until it expires?
Governor, Bank of Canada
We have to work with the impacts on the ground, and so we'll see. If nothing changes, the agreement will remain in effect.
Conservative
Éric Lefebvre Conservative Richmond—Arthabaska, QC
Earlier, you spoke about the link between artificial intelligence and productivity. You spoke about productivity at length during our last meeting. Canada is lagging far behind some of the other major countries in the world.
If you were to sound the alarm about the impacts of artificial intelligence on productivity, what would it be?