Tariffs will lower American output: Poloz

OTTAWA — The head of the Bank of Canada said a broad-based hike in American tariffs would lower U.S. economic output after about five years — whether or not other countries retaliate with their own protectionist measures.

In a Mexico City speech Thursday, central bank governor Stephen Poloz said attempts by countries throughout history to shield their industries and workers from foreign competition have been counterproductive.

“We know that with protectionism everybody loses eventually, including the country that puts the policies in place,” Poloz said in his address to the Canadian chamber of commerce in Mexico and the Club de Industriales.

Poloz’s remarks came as Canadian and Mexican companies face significant unknowns over their economic relationships with the U.S. amid talk in Washington of fresh protectionist policies, including border tariffs. Last month, U.S. President Donald Trump slapped retroactive duties on softwood lumber averaging 20 per cent.

Canada and Mexico must also deal with additional risks when they engage with the U.S. on NAFTA’s renegotiation, which is expected to begin later this year.

Poloz proposed a remedy for the “common challenge” facing the two countries: They should each work to broaden their access to markets beyond the continent.

“The antidote to uncertainty is certainty,” said Poloz.