Bank of Canada must get comfortable with the unknown as long as Trump is in charge

In two straight decisions, the Bank of Canada has said it was leaving its key overnight lending rate unchanged as it gains "more information on U.S. trade policy and its impacts."

The problem is that since Donald Trump reclaimed the presidency, gaining more information about U.S. trade policy has been nearly impossible. In fact, it's now abundantly clear that uncertainty is a core part of the administration's plan.

It's hard to know from one day to the next what Trump is going to do.

"We still do not know what tariffs will be imposed, whether they'll be reduced or escalated, or how long all of this will last," Bank of Canada governor Tiff Macklem said back in April. Those remarks could just as well have come this week.

Since then, Prime Minister Mark Carney met with Trump in Washington. Carney called those talks "wide-ranging" and "constructive."

The meeting was heralded as a sort of reset of Canada-U.S. relations and the beginning of a path out of the trade war. But those kinds of claims have tended to become the stuff of head-spinning reversals of late.

Canada was slapped with a doubling of tariffs on steel and aluminum this week. The original 25 per cent tariffs were expected to hit those industries hard. Fifty per cent tariffs will clobber them.

"At a 50 per cent tariff, we basically consider the U.S. market closed — completely closed, door slammed shut, if you will — to Canadian steel," said Catherine Cobden, president and CEO of the Canadian Steel Producers Association.

The question at the heart of Canada's trade policy is how anyone, from businesses to central bankers, can plan for a future so mired in unknowns.

And that's part of the U.S. strategy.

U.S. Treasury Secretary Scott Bessent has called it "strategic uncertainty."

Bessent is one of Trump's key economic advisers and an architect of the administration's approach to trade and tariffs. At a briefing in April, he admitted that the United States is using uncertainty as leverage to reshape global trade.

"We've created a process. I think the aperture of uncertainty will be narrowing, and as we start moving forward, announcing deals, then there will be certainty, but you know certainty's not necessarily a good thing in negotiating."

The impact of that can be seen and felt right across Canada.