In this context, the progressive lowering of trade barriers worldwide has had outsized effects. Trade agreements have enabled much closer economic integration, and trade flows have burgeoned, leading to increases in productivity and living standards. These trading relationships are now being called into question. Populist movements in some of our major trading partners are demanding new trade barriers.
However, such protectionist measures would undoubtedly mean less trade, which would reduce economic growth. While I can’t comment on the specifics of any particular agreement, we have certainly been assessing this shift toward protectionism, how it might affect the outlook for growth in Canada and its trading partners and ultimately what it would mean for the conduct of our monetary policy.