Bank of Canada governor Tiff Macklem said tit-for-tat tariffs of the sort the U.S., Canada and Mexico threatened over the weekend would reduce long-run prosperity. He characterized President Donald Trump’s trade policy as one of several “structural headwinds” that are both inflationary and deflationary, setting up central banks for “harder choices” that will inevitably disappoint people and invite political interference. (The Logic)

Talking point: The remarks were Macklem’s first since the U.S. and Canada flirted with a trade war last weekend; coincidentally, he made them virtually at a conference taking place in Mexico City. Macklem opted against addressing trade tensions directly, instead reiterating that it would be a mistake to expect central banks to come to the rescue like they did during COVID-19. Anticipating displeasure with that stance, Macklem said central banks should remain “humble,” stick to their mandates, seek better information and “avoid the temptation” to do too much.