Ottawa should relax regulatory and tax burdens in responding to Trump tariffs, National Bank CEO says

As U.S. President Donald Trump threatens tariffs, National Bank of Canada chief executive officer Laurent Ferreira is urging the federal government to relax regulatory and tax burdens, and implement its own reforms aimed at protecting the Canadian economy.

 

In an interview with The Globe and Mail, Mr. Ferreira said Canada needs to protect its national interests in response to a looming trade war, including implementing what he called a “Buy Canada” act.

 

With the U.S. administration expected to ease up on corporate taxes and regulatory requirements, Mr. Trump has reignited a debate over productivity and competition, according to the CEO of Canada’s sixth-largest bank.

 

“We should aim to have a more competitive tax regime for businesses in Canada,” Mr. Ferreira said Thursday. “We’re really dependent on the U.S. when it comes to our energy, and we know we could do a lot more. We should start thinking about Asian and European markets.”

On Monday, Mr. Trump said the United States could impose a 25-per-cent tariff on Canadian goods as soon as Feb. 1, which would weigh severely on this country’s economy.

 

To bolster Canada’s economy and defend against the impact of tariffs, the government should lean on its strengths in energy, natural resources, agriculture and manufacturing, Mr. Ferreira said. He cited rising concerns worldwide over food security and access to critical minerals that power key infrastructure – areas in which Canada could lead in trade.

 

He also said that the government should implement legislation governing procurement, research and development, and artificial intelligence for defence and national-security applications. Rising geopolitical tensions with Russia and China, disputes over Arctic sovereignty and U.S. demands for Canada to invest in its North Atlantic Treaty Organization commitments are putting pressure on the country’s defence costs.

 

“The pressure will be on us to spend more on defence. And if we have to spend more on defence, let’s make money out of it,” Mr. Ferreira said.

 

“We’re not going to start making submarines and high-tech fighter jets, but on certain things, we should have Canadian procurement and tie it with R&D and artificial intelligence. In artificial intelligence, a lot of our spending should go to the security of our country, including cyber.”

 

Earlier Thursday, Mr. Ferreira proposed these measures to an audience at a lunch held by the Chamber of Commerce of Metropolitan Montreal. He said the country faces a “combative administration” south of the border and Canada should “rebuild our relationships and stand firm in negotiating with our partner.”

 

Some of the CEOs of Canada’s biggest banks have cautioned that uncertainty caused by potential tariffs could damage the economies of this country and the U.S.

 

Mr. Ferreira said that he is encouraged by collaboration between the federal government and the provinces to build a plan to respond to potential tariffs.

 

Prime Minister Justin Trudeau and the country’s premiers plan to meet weekly to discuss trade concerns. The premiers also agreed to renew discussions around reducing provincial and territorial trade barriers within Canada.

“They seem to have drawn up a plan to work with the Trump administration,” Mr. Ferreira said in the interview. “Obviously, if they become more aggressive with Canada on tariffs, I assume we’ll have a response as well. But sometimes you need that kind of shock to wake up and get people to work together.”

 

In the financial sector, Canada’s bank CEOs have expressed concerns in recent years that higher taxes and stricter regulations harm their competitiveness compared to global peers. Meanwhile, Mr. Trump is expected to lower regulatory requirements for U.S. banks, in particular rules on capital levels and bank mergers and acquisitions that were implemented under the previous administration.

 

If Canadian banks do become less competitive compared to their U.S. peers, the government and Canada’s banking regulators will likely adjust regulatory and tax barriers, Mr. Ferreira said.

 

“I get a sense that, in the current environment, we’re not going to just sit and watch the Americans eat our lunch, so I’m pretty comfortable that we’re going to get a reaction,” he said. “And we’ve always had a really good reaction from government and regulators when we were in a crisis situation.”

 

 

 

 

This article was first reported by The Globe and Mail