Victor Dodig, president and CEO of CIBC speaks during the annual meeting of shareholders in Ottawa in 2017.Justin Tang/The Canadian Press
As Ottawa prepares its response to potential U.S. tariffs, Canadian Imperial Bank of Commerce CM-T chief executive officer Victor Dodig is joining the call for the federal government to appoint a “border czar,” as well as offer financial support for businesses caught in the crosshairs of a trade war.
With U.S. President Donald Trump’s looming Feb. 1 deadline to impose 25-per-cent tariffs on Canadian goods, the threat leaves government officials and corporate leaders with little time left to prepare for the impacts.
In an interview with The Globe and Mail, Mr. Dodig said Ottawa should act quickly to address the U.S. administration’s concerns over border security and the flow of fentanyl to help mitigate the scope of the brewing trade war. He also anticipates Ottawa will provide relief efforts for businesses, similar to support provided during the COVID-19 pandemic.
“The government should give serious consideration to the appointment of a border czar from the Canadian side so that we can deal with this period of political fluidity that we’re going to see in Canada,” Mr. Dodig said in the interview.
“Appointing a border czar that stands above the politics and would be respected by our American allies and respected by any political leader in Canada – that’s what needs to be done because that will continue to show the seriousness with which we as Canadians are dealing with the issue that’s been raised by the Trump administration.”
On Wednesday, Howard Lutnick – billionaire Wall Street CEO and Trump’s nominee to run the Commerce Department – said Mr. Trump’s deadline on Saturday was intended to pressure Canada and Mexico to stop the trafficking of fentanyl into the U.S.
Mr. Trump has repeatedly pointed to this as a major issue.
The same day, Alberta Premier Danielle Smith proposed installing a Canadian border czar to liaise with U.S. counterpart Tom Homan to crack down on illegal crossings and drug trafficking.
CIBC is leading a public-private partnership called Project Guardian, which aims to help companies detect the laundering of drug trafficking proceeds. The partnership includes the Financial Transactions and Reports Analysis Centre of Canada (FinTRAC), RCMP, Canada Border Services Agency, Canada Post Corp. and the U.S. Department of Homeland Security.
A trade war between Canada and the U.S. could send the Canadian economy into a recession and drive up inflation within the year, according to the Bank of Canada.
During the pandemic, Canada’s banking regulator loosened capital reserve requirements for large banks by cutting their domestic stability buffer – which requires lenders to hold billions of dollars in excess cash to cushion the blow of an economic downturn. By lowering the buffer, the Office of the Superintendent of Financial Institutions freed up hundreds of billions of dollars in lending capacity for businesses and consumers.
The federal government should also consider providing support for businesses affected by tariffs, including loan guarantees and payment deferral programs, Mr. Dodig said.
“They’ll look to support those industries that are most affected,” Mr. Dodig said. “A lot of this is going to depend on what policy decisions are made by the U.S. administration, which Canadian industries and segment sectors are most affected, and what kind of support can get put in place.”
As Canadian businesses try to anticipate the types of tariffs that could be implemented, Canada’s fifth-largest bank has been combing through its loan portfolios and reaching out to clients with U.S. operations, or those that may be affected by tariffs.
“It’s really important to understand how vulnerable certain clients are in the event of a trade war,” Mr. Dodig said. “If it should happen, we would go into overdrive in terms of communication and engagement.”