Donald Trump’s trade feud with China is still keeping Stephen Poloz up at night.

“I worry most about an escalation in the trade war,” the Bank of Canada governor told BNN Bloomberg in an interview Wednesday.

“It doesn’t even have to escalate, if it just continues … in this haphazard fashion [where] one day it’s this, one day it’s that, then how do you decide? As a real business person trying to decide to invest, and spend real money – how do you make those kinds of decisions?” he added.

“People have kind of frozen up and that can have pretty big consequences elsewhere in the world.”


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    The Bank of Canada held its benchmark interest rate at 1.75 per cent Wednesday, bucking a trend as other central banks broadly loosen monetary policy.

    Poloz said he factored the trade war into Wednesday’s decision, citing this country’s first-hand familiarity with the American president’s tariff wrath.

    “Canada has been exposed to the trade war since Trump was elected,” he said.

    “We were first. So, a lot of that downside in investment is already in our decision-making, and in our numbers.”

    However, Poloz reiterated that the Canadian economy remains on track, despite potential influence from global politics and trade.

    “We’re not an island. We are feeling these international things, but … we’re getting a rebound in housing, good solid job growth, and consumption spending at the same time. So, there’s a bit of an offset right there,” Poloz said.

    “In aggregate, things are still okay.”

    He added that the Canadian economy is better prepared than it was previously to weather a potential downturn.

    “We start this [cycle] in a much stronger place than we were five years ago,” Poloz said. “We’ve got unemployment, it’s not perfect, but it’s pretty well at an all-time low and inflation’s on-target.”

    “So, we’re kind of as close to home as we can get. We’re in a good place to cope with what comes our way.”