“It’s important to note that there are significant macro forces working against each other right now,” McKay told the audience of financial analysts and investors.
“On one hand, you have lower interest rates in Canada to stimulate investments across asset classes. However, this is being offset to a degree by increasing uncertainty created by tariffs and the impact it’s having on business and jobs.”
The comments come as U.S. President Donald Trump continues to create uncertainty for the Canadian economy with his threats to impose a broad range of tariffs on goods imported by the United States.
Canada has retaliated with tariffs of its own on U.S. goods and moved to help boost trade between provinces.
McKay said commercial client sentiment has weakened as companies in some sectors are deferring investments until they have greater clarity on the impact of tariffs on their businesses.
However, he also says this is the moment to unite the country behind a long-term economic agenda that boosts competition and drives prosperity.
“What is not uncertain, though, is our belief in Canada and its potential in the medium and long-term. Our home country has an unprecedented opportunity to build a better and more prosperous future to get some big things done that we just couldn’t do before,” McKay said.
He said Canada needs to eliminate barriers to growth and productivity, get energy and infrastructure projects approved faster and support homegrown talent.
Trump signed an executive order Wednesday to impose 25% tariffs on auto imports to the United States starting next week, but the cross-border integration of the industry is resulting in confusion over how that will play out.
The White House has said automobiles imported under the Canada-U.S.-Mexico Agreement will only be tariffed on the value of content not made in the United States.
The tariffs apply not only to whole vehicles, but also to certain parts like engines and transmissions. Parts subject to the trade agreement won’t face the new tariffs until the U.S. figures out how to apply tariffs to their non-U.S. content, according to the executive order Trump signed on Wednesday.
The U.S. president has also promised other so-called reciprocal tariffs on April 2 that will impose fees that match the rates that other countries charge on imports coming from the U.S.
Earlier this month, the U.S. hit Canada with broad tariffs, only to partially pause the import fees a few days later. The future of these tariffs is unclear.
Trump did move forward earlier this month with 25% tariffs on all steel and aluminum imports to the U.S., including Canadian products.
Read More: RBC CEO Dave McKay says bank well positioned as tariffs create uncertainty
