'You actually have a backdrop that's pretty good’
Despite the fall out from the trade talks with the US, Canada can survive, according to bank leaders.
Scotiabank and BMO's chief executives both described the fallout from U.S. President Donald Trump's latest tariffs as "manageable" on post-earnings calls Tuesday, a read HR professionals should weigh against a more cautious outside view, since it signals how bank leadership sees near-term hiring and credit conditions for Canadian employers.
Scotiabank CEO Scott Thomson called the trade volatility "manageable" and pointed to labour market strength: "If you look at the job growth numbers, if you look at the fiscal capacity on the back of oil prices... you actually have a backdrop that's pretty good," according to a CBC report. Scotiabank said the latest 50% U.S. tariffs, imposed over the weekend on about $28 billion of Canadian goods, directly affect less than 1% of its total loan book, according to the same article.
Meanwhile, BMO CEO Darryl White used similar language, calling the impact "absolutely manageable" and saying it has "a very high chance of being mitigated in many ways". White urged a "clinical lens" on the dispute and said BMO is "closely monitoring the effect on our clients and our portfolios," including supply chain adjustments and market diversification, the Financial Post reported.
Both CEOs urged Ottawa to use the moment to remove interprovincial trade barriers and speed project approvals. Thomson said Canada should "continue to diversify our trade while also continuing the great trade relationship we have with the U.S.," CBC reported.
The collapse of Canada–US trade talks in the early hours of Aug. 22 has set off a wave of alarm across Canadian business communities, with an analysis suggesting roughly 87,000 Canadian jobs could be at risk because of the new 50-per-cent tariffs on Canadian goods. Then, Canada moved to impose sweeping counter-tariffs on approximately $27.6 billion worth of American goods on Tuesday.
A more cautious voice
The tariffs are expected to affect 5% of Canada's annual exports to the U.S., and Trump has threatened to double tariffs on some Canadian autos next year, and Prime Minister Mark Carney has vowed retaliation, the Financial Post noted.
However, not everyone shares the CEOs' confidence. John Zechner, chairman of J Zechner Associates, told CBC News both banks booked lower-than-expected loan-loss provisions this quarter but warned "things are going to get tougher" and that "the Canadian banks... can't help but be impacted by this.”
Because of the new tariffs, Ontario faces the largest job losses, followed by Quebec and British Columbia, according to a previous report.
