The Globe and Mail reports in its Saturday, Feb. 22, edition that Bank of Canada Governor Tiff Macklem warned that a trade war with the U.S. could weaken the Canadian economy, hindering growth and raising inflation. The Globe's Mark Rendell writes that Mr. Macklem added that it is not the right time to change the 2-per-cent inflation target, even as the bank reviews its monetary policy mandate. Mr. Macklem said: "In the pandemic, we had a steep recession followed by a rapid recovery as the economy reopened. This time, if tariffs are long-lasting and broad-based, there won't be a bounce-back. We may eventually regain our current rate of growth, but the level of output would be permanently lower. It's more than a shock; it's a structural change." A trade war would create challenges for the BOC, potentially pushing the fragile economy into recession. Increased tariffs could raise consumer prices as the government retaliates, the loonie depreciates and businesses adjust supply chains. The BOC would have to choose between lowering interest rates to support growth and employment or raising them to control inflation and prevent a price jump from becoming ingrained in consumer and business behaviour.