BMO Financial Group’s CEO Darryl White believes that even though the business environment continues to evolve, the enduring relationship between the U.S. and Canada provides both economies with a competitive advantage.  

“We have natural advantages here in North America,” he said at the 19th annual Toronto Global Forum organized by the International Economic Forum of the Americas (IEFA). White noted that despite trade-related uncertainties, the U.S. and Canada will continue to value their long-running partnership. “Our American friends are pretty clear that it might be America First, but it's not necessarily America alone,” he added. 

That was one of many takeaways from a fireside chat with White hosted by the Honourable Brian Tobin, Vice Chair of BMO Financial Group and Chair of the Toronto Global Forum. Their conversation touched on trade, the North American economy and how the Canadian economy can prosper. Below are some highlights. 

While some may hold out hope that the trade relationship between the U.S. and Canada will revert to what it was in the past, White is unconvinced. “There's going to be change, but how profound that change will be, we don't know yet,” he said. 

Still, whichever way trade discussions develop, Canada and the U.S. will retain their close alliance.  

The objective for Canada is twofold, he explained: to get the best deal for Canadians and for North America. 

While White was optimistic about the future of Canada and U.S. relations, he said the Canadian economy is showing some signs of risk.  

Markets are performing well, but loan growth is slowing, which White explained could signal a slowdown in demand. Credit quality is also starting to be affected, he added.  

Currently, unemployment is sitting at 7.1%, but White expects that could rise toward 8%. Against this backdrop, he applauded the Bank of Canada for moving faster than most advanced economies on rates, although he acknowledged that they may not cut much further. However, the U.S. will likely see more rate cuts, he said.  

When describing what Canada can do to be more competitive in the global economy, White said: “We need a little less conversation, a little more action. We have to take action in our own house, and we have to do it fast.” 

As much as international trade has been a focus, there are other things Canada could do to offset the impact of disruptions to the flow of goods along the 49th parallel. At the top of White’s list: tax incentives. 

“We did adjust capital gains, but we have to adjust the accelerated depreciation,” he said. “Corporate tax rates need to be competitive. Personal tax rates need to be competitive.” 

On asset depreciation, he explained that businesses in the U.S. can write down a capital project in one year, which isn’t the case in Canada, reducing the country’s attractiveness as an investment destination. As much as there is a push to support Canadian businesses, White said capital is going to follow the path of least resistance.  

White said that this is the time for government to invest and unleash the capacity of Canadians, strengthen the country’s ability to generate energy, and diversify the economy by expanding into more markets. “I believe in Advantage North America profoundly,” he said. “But it doesn't mean we're not going to have bets and businesses in other parts of the world.”