COLUMN: Trump Threatens the Canadian Aviation Industry, and the Bank of Canada Stands Idle

Tiff Macklem Faces Uncertainty

Amid this emerging trade conflict, the Bank of Canada announced Wednesday that it was keeping its benchmark interest rate at 2.25 percent, a level that has remained unchanged since last October. This decision, widely anticipated by financial markets, reflects Governor Tiff Macklem’s caution in the face of an increasingly unpredictable economic environment. In his remarks, Macklem acknowledged that this rate “remains appropriate” but offered little guidance on the future direction of monetary policy.

I watch Tiff Macklem on TV and see a man walking on eggshells. And who can blame him? When your economy depends so heavily on the whims of a U.S. president who changes his mind more often than he changes his socks, caution becomes the only rational policy. Keeping rates at 2.25 percent isn’t a sign of confidence; it’s an admission of powerlessness. Macklem knows as well as I do that his hands are tied by what’s happening in Washington. It’s like trying to fly a plane during a storm—you don’t have much control anymore; you’re just trying not to crash. The question that keeps running through my mind is: How much longer can Ottawa keep up this pretense of an independent monetary policy?

Fed and Bank of Canada on the Same Page

The U.S. Federal Reserve also opted to maintain the status quo on Wednesday, keeping interest rates unchanged after three consecutive cuts. Fed Chair Jerome Powell was just as evasive as his Canadian counterpart regarding the future direction of monetary policy, noting that the central bank was “well-positioned” to make decisions “meeting by meeting.” This synchronicity between the two North American institutions is no coincidence and reflects the deep interdependence of the Canadian and U.S. economies.

Powell and Macklem, two men facing the same abyss. They utter the same empty words, using the same technocratic jargon to mask the same powerlessness. “Well-positioned”—but well-positioned for what? To deal with what? This is pure central-banker language, a ritual designed to calm the markets without saying anything concrete. What strikes me is this synchronized dance as the music grows increasingly discordant. The United States and Canada claim to be heading in the same direction, but is that really the case? Or are we witnessing a silent separation—a realization in Ottawa that the era of automatic alignment with Washington is coming to an end?

Canadian Oil Finds New Markets

Despite these challenges, the Canadian economy is showing encouraging signs of resilience and adaptability. Statistics Canada reported that the country shipped a record share of its crude oil to non-U.S. countries in November, accounting for 14.1 percent of its total oil exports. China alone accounted for 10 percent of Canadian oil exports that month—a dramatic increase from the average of just 3 percent observed in 2023.

Finally, some good news. Not just good news—great news. We’ve been talking about trade diversification in Canada for decades, and generally it’s remained at the stage of good intentions and political rhetoric. Now, we have concrete, tangible figures. Canada is finally sending more of its oil to places other than the United States. It’s like watching a teenager leave the family home—unnerving at first, but ultimately necessary for growing up. Of course, China isn’t an ideal partner, and no one should have any illusions about that. But between total dependence on Washington and prudent geographic diversification, the choice seems pretty clear to me. This is the beginning of true economic independence—or at least relative autonomy.

The Korean Turn in the Automotive Industry

Canada’s economic diversification is also evident in other strategic sectors. Ottawa and Seoul signed a memorandum of understanding this week aimed at attracting investment and manufacturing from South Korea’s automotive sector to Canada. This non-binding document, signed by Industry Minister Mélanie Joly and her counterpart Kim Jung-kwan, pledges collaboration between the two parties to promote the manufacturing of automobiles, electric vehicles, and batteries. South Korea represents a major potential partner for Canada as it seeks to strengthen its automotive sector.

That’s the real answer to Trump’s threats. Not diplomatic protests, not angry tweets, but real, concrete partnerships with other countries. South Korea isn’t a random choice—it’s an industrial powerhouse, a country that has understood that the future belongs to those who know how to manufacture. When I see Mélanie Joly signing this agreement, I tell myself that finally, Ottawa is starting to understand that the world doesn’t end at the U.S. border. Korean submarines, Hyundai factories, electric vehicle batteries—these are tangible things, real jobs, a genuine industrial strategy. This is what we should have been doing for years instead of begging Washington to be nice to us. Better late than never, as they say.

Ottawa Tops the List; British Columbia Leads the Way

On a more positive note, The Globe and Mail has published its third annual ranking of Canada’s most livable cities, evaluating 454 municipalities across ten key categories. The results reveal Ottawa as the most livable major city, North Vancouver as the best large city, West Vancouver as the best medium-sized city, and Pitt Meadows, British Columbia, as the best small city.

Ottawa takes the top spot. Ottawa, the nation’s capital—the city where bureaucrats decide the country’s fate. Irony? Perhaps. But it must be acknowledged that Ottawa has undeniable qualities—the Ottawa River, the parks, the museums, and a stability that few other Canadian cities can offer. What strikes me about this ranking is British Columbia’s overwhelming dominance. North Vancouver, West Vancouver, Pitt Meadows—it’s as if western Canada has discovered the secret to urban happiness. And perhaps they have, in fact. I wonder if this isn’t a form of silent vote, a way for Canadians to express what they truly value. Not growth at any cost, not rampant real estate speculation, but a measured, thoughtful, and sustainable quality of life.

Cities for Every Stage of Life

This edition of the ranking introduces a major innovation with sub-rankings tailored to different life stages, recognizing that what makes a city ideal for a recent graduate may differ significantly from what a family with children or a retiree is looking for. The researchers developed specific rankings for young professionals, families starting a home, entrepreneurs, and retirees. Pitt Meadows was ranked the third most livable city in Canada and the top small city.

It’s this approach that really wins me over. You can’t judge a city by applying a single standard to everyone. What a 25-year-old entrepreneur needs isn’t what a 70-year-old retiree needs. Recognizing this simple truth is already a giant leap forward in how we think about urban planning. And then there’s Pitt Meadows—this small town that came in third in the overall rankings—that fills me with deep joy. It proves that you don’t have to be a metropolis to offer a high quality of life. On the contrary, perhaps it’s in smaller towns that we find what we’ve lost in big cities: a sense of community, neighborhoods where people know each other, and a connection to nature that isn’t just a marketing gimmick in a real estate brochure.

Learning to Live with the Unpredictable

This week has highlighted an uncomfortable truth: uncertainty has become the new normal for the Canadian economy. Between Trump’s unpredictable tariff threats, the Bank of Canada’s cautious status quo, and accelerating diversification efforts, the country is navigating uncharted waters. Canadian economic policymakers must now devise their strategies while accepting that what was true yesterday may no longer be true tomorrow.

Uncertainty as the new normal—what a terrifying, yet all-too-accurate phrase. I remember a time, not so long ago, when economists could make five-year forecasts with some credibility. Today? Quarterly forecasts seem like tarot readings. What strikes me is just how invisible and commonplace this uncertainty has become. We’re getting used to living in a fog, to making decisions without knowing what tomorrow holds. It’s like walking a tightrope blindfolded while telling ourselves that this is normal. It’s not normal. It’s not healthy. And yet, it has become our everyday reality. The question is no longer when this uncertainty will disappear, but how we will learn to live with it—and even thrive—in spite of it.

Between Dependence and Emancipation

This week’s events draw a clear line between two possible futures for Canada. The first continues to rely excessively on the United States, subject to Washington’s whims. The second resolutely embraces diversification, seeking new partners and new markets. Trump’s threats against the Canadian aviation industry are just the latest reminder that unilateral dependence on a single market constitutes a strategic vulnerability.

This is where we stand. At a crossroads, as they say with those journalistic clichés I hate so much. But this cliché has become reality. Canada must choose. Should it try to please Washington and hope Trump will be kind? Or should it forge its own path, build its own partnerships, and shape its own destiny? The answer seems obvious to me. Of course, the transition will be difficult. Of course, there will be costs, mistakes, and moments of doubt. But the alternative—continuing to beg for American favor—is far worse. What I see in this week is the beginning of something new. A Canada that understands its future isn’t decided in the White House, but in Ottawa, in the provinces, and in the companies that dare to look beyond the border to the south. It’s exciting. It’s terrifying. It’s necessary.

Signed, Jacques Provost