A Follow-on to our Open Letter to Governor Tiff Macklem, Bank of Canada

October 17, 2025

Dear Senior Deputy Governor Rogers,

At Governor Macklem’s recent presentation in Saskatoon, he advised the people there, and by extension, all Canadians, to “roll up our sleeves” and use our “elbows up” economic patriotism to expand to global markets in order to fight off the “trade war” with the United States (US). Then, on Oct. 9^th, 2025, you, Senior Deputy Governor Carolyn Rogers, gave a speech in Toronto on “Productivity’s Competitive Edge.”[1]  Such cheerleading is misplaced when Canadian businesses are being strangled by regulation[2] and drummed into bankruptcy by climate policies and the carbon tax – the industrial carbon tax being still in place; the consumer-facing tax has simply been zero-ed, not cancelled.

We have some additional research that provides important context for Canadians and Canadian businesses about Canada’s global markets from independent market analyst, Eugene van den Berg.

Between 2001 and 2024, Canada expanded its bilateral free-trade agreements to eleven and entered into four multi-party ones, including the renewed NAFTA. The compounded annual growth rate (CAGR) in the number of countries with which Canada has trade agreements rose by ~4.6% per year between 2001 and 2024, while the CAGR in trade value increased by 3.4% in US dollar terms. Yet trade remains heavily dependent on the US. Approximately 76% of Canada’s exports are directed to the US, equivalent to around 50% of the country’s GDP. While this share has fallen from 87% in 2001, the current level still leaves Canada highly exposed. Canada’s global trade and GDP growth continue to lag, highlighting the limited success of diversification. Over decades, the economy has failed to insulate itself against shocks.

Between 2001 and 2024, the number of partner countries increased from 37 to 103. Particularly notable is the category “Other Countries,” where trade ranged from US$170 thousand to US$1.4 billion in 2001, compared with US$45.3 million to US$1.472 billion in 2024. Adjusted for inflation, the low-end trade in 2001 was US$280 thousand expressed in 2024 dollars, which grew to US$45.3 million in 2024—about 161 times higher. The upper end, however, stagnated near US$1.4 billion, so the real trade value declined. If the 2024 upper end trade stayed the same as in 2001 in real, constant 2024 dollars, the 2024 trade value would have been about US$2.3 billion. Thus, the upper bound fell ~42%. This shows that while Canada increased the number of destinations, it did not expand the value range at the top end. More countries are now sharing smaller slices of the export pie—diversification by count, not by value. (bold emphasis added

Total exports in 2001 of US$261 billion equalled ~US$429.5 billion in 2024 (inflation-adjusted). Nominal 2024 exports reached US$569 billion, approximately 33% higher than the inflation-adjusted level, or US$140 billion above it. That is real value added. However, much of this growth originated from the US: in 2001, inflation-adjusted US exports were approximately US$374 billion; in 2024, they reached US$435 billion—only about 16% higher than the inflation-adjusted level. This accounts for roughly half of why Canada has not meaningfully diversified its exports over the past 23 years.

The picture is further clouded by domestic climate change policy. Since 2015, energy marginalization policies have deterred investment and reduced the net inflow of foreign capital. Capital is leaving Canada consistently since 2014. Without stronger net Foreign Direct Investment (FDI), Canada lacks the fixed investment resources to make a quantum leap in export growth. The outcome since 2001 is a broader pattern: more agreements and partners, but still concentrated trade value, modest growth, and declining competitiveness. Declining competitiveness results from years of low productivity, which is also declining in real terms.

Referencing StatsCanada, we can see that US-Canada trade is vital.

https://www150.statcan.gc.ca/n1/daily-quotidien/250516/g-b002-eng.htm

Meanwhile, in terms of energy resources and raw minerals trade by state:

Source: https://businessdatalab.ca/canada-u-s-trade-tracker/?utm_source=chatgpt.com

Anyone observing a map of the world can see that, no matter how productive, Canada will have a difficult time being competitive with other nations, simply due to the vast distances to markets, other than those which are just across our shared border with the US. 

Graph provided by Eugene van den Berg.

On top of that, interprovincial trade has also declined.  A research colleague quipped that, “‘Confederation of US Suppliers’ might be a better way to describe the Dominion of Canada.”

While people have framed the US tariffs as vindictive and a trade war,[3] there is no such framing of trade relations with China, a country which executed four (still unnamed) Canadians, just prior to the 2025 spring election, allegedly for drug crimes.[4] Canadian farmers were hit hard by trade embargoes by China during the period of time that Canada detained Huawei CFO Meng Wanzhou; Canadians Michael Spavor and Michael Korvig were detained in China on allegations of espionage.  More recently, due to Canada’s 100% tariffs on Chinese EVs, Canadian farmers have again been targeted for reprisal as of May 2025, “On March 8, 2025, China’s commerce ministry announced it will apply a 100% tariff on Canadian canola oil, oil cakes and pea imports, and a 25% duty on Canadian aquatic products and pork.”[5]  Other global issues haunt Canada’s trade relationship with China.[6]

Quoting van den Berg, he writes:

“Since 2001, Agriculture & Food exports have grown the most reflecting growth of 34% and 106% respectively, above 2001 inflation adjusted levels, and at 3.34% and 5.58% CAGRs, respectively.”
Van den Berg comments that what is remarkable about the Canadian oil & gas sector is that it has the ability to leverage technology to absorb external shocks. That is one remarkable resiliency even though the sector has reduced the number of people working in it. Investors are rattled by political uncertainty, in holding patterns, and yet the oil and gas sector produces enough free cash flow that offers good returns, reduces debt and returning capital to investors.
Fuels & Mining products, and Fuels respectively held their share of total exports. Now what’s good about that picture? The industry’s resiliency, embracing technology to drive efficiency to weather the “climate change war” against it. Each respectively 12% and 34% above their 2001 inflation adjusted levels. That make sense considering the wide use of crude oil evident in daily products around us, and around other people in other countries. Examples include, asphalt that is used for roofing and roads, PVC piping for water distribution, sewers, storm water drainage, syringes, IV bags/tubing, catheters, inhalers parts, sterile packaging films, surgical gowns/masks/gloves, hospital mattress foams, disinfectants, food packaging, electronics, circuit boards, cables, tires on your car, detergents & surfactants, soaps, solvents, sanitizers, personal-care, packaging, petroleum jelly/ointments, waxes, safety gear, and many more.

Despite having diversified our global markets, van den Berg explains that Canada’s obsession with restrictive climate and Net Zero policies has led to massive 𝑪𝒖𝒎𝒖𝒍𝒂𝒕𝒊𝒗𝒆 𝑷𝒓𝒐𝒔𝒑𝒆𝒓𝒊𝒕𝒚 𝒐𝒑𝒑𝒐𝒓𝒕𝒖𝒏𝒊𝒕𝒚 𝒍𝒐𝒔𝒔𝒆𝒔 𝒐𝒇 ~𝑼𝑺$𝟏.𝟕𝟒𝟏 𝒕𝒓𝒊𝒍𝒍𝒊𝒐𝒏 (𝟐𝟎𝟏𝟓 𝒕𝒐 𝟐𝟎𝟐𝟓). This is based on the estimated economic loss that would have been forthcoming due to the cancellation of large infrastructure projects and the effect of delays on a 4^th project (Keystone, Northern Gateway, EE and TMXEP).

It is deeply concerning that Environment and Climate Change Minister Julie Dabrusin has indicated that since Canada will not meet its emissions targets, she wants to “raise ambition” at the same time that the federal government is also pushing for draconian censorship laws, which constitutional rights groups have raised concerns about – Bill C-2,[7] C-8, C-9,[8] C-12.[9]   As reported in the Western Standard, Drabusin said:

“We know the emissions target for 2030 is really ambitious,” Dabrusin told reporters.

“But Canadians are ambitious. It’s going to be hard to do, but we’re going to keep working to make sure we get Canada to net zero by 2050.”

Based on the foregoing evidence of Cumulative Prosperity opportunity losses of ~US$1.741 trillion (2015-2025), largely due to Canada’s climate policies and Net Zero targets, how can we possibly become “The strongest economy in the G7” while at the same time reaching Net Zero targets?

It is deeply concerning that Simon Donner, a member of the Net Zero Advisory Board, at a Canadian Climate Institute Conference in 2022, advised “courage.” He proposed pathways whereby Canada could rapidly drop our emissions, using a skiing analogy, that we could simply choose the “Double Black Diamond” path, and use our basic climate (skiing) skills to navigate the sharp and deadly decline by simply doing so with “courage.”

Donner blithely outlines what he believes will power Canada’s future. Donner claims that demand for oil in a net zero world is lower.  The recent Statistical Review of World Energy and IEA reports show the opposite trends.  Donner goes on to claim that,

“Electricity is going to be generated by Net Zero sources including wind, solar and hydro. Passenger transportation is going to be Electric. Heavy-duty Transportation will be powered by a mix of electricity but also hydrogen and biofuels. Heating and Cooling of buildings is mostly going to be electric with exceptions for some remote communities industrial processes are going to be electric with some rule for hydrogen and that which we can’t remove we can’t eliminate will carbon removal. Technologies like direct air capture and various forms of natural climate solutions would be used to counter the remaining emissions.”

Donner expressed these views just 2 years ago; in the interim, the explosion of demand for power generation to serve Artificial Intelligence (AI) data centres has made it clear that society cannot serve both AI development and Net Zero climate change electrification/decarbonization.  There is simply not enough power generation available in the short-term, and due to backlogs for gas turbines, electrical substations, transformers and even copper wire, society will not be electrifying.  If the Canadian government is dead set on reaching climate targets, the only alternative would be rationing, the imposition of a higher industrial carbon tax, leading to the closure of large emitting industries – the opposite of “rolling up our sleeves,” increased productivity, or “elbows up” economic patriotism.

Further, Prof. Michael J. Kelly outlines how the skilled trades workforce does not exist to do such a radical Net Zero conversion of society in the UK.[10]  This situation is paralleled in Canada.  Likewise, Kelly explains why wind and solar cannot provide the reliable power generation that society needs.

Canada Post Troubles – an Economic Barrier for SMEs

Yet organizations like Canada Post, feel it is their obligation to invest in renewables and EVs.  Did this imperil the operation’s finances – creating a domino effect on Canada’s Small and Medium-sized Enterprises (SME/small business) sector (SME – defined as businesses with 1 to 499 employees)?

According to Responsible Investor Association (RIA), in 2019, Canada Post Pension Plan had $27 Billion in Assets under Management for its then 90,000 plan members. Canada Post joined Pembina Institute’s Urban Delivery Solutions Initiative in 2019.[11] Pembina Institute is a tax-subsidized charity. Canada Post Pension Plan joined the UNPRI – United Nations Principles for Responsible Investment, in 2020, which is focussed on ESG. In 2021, Canada Post added 353 hybrid vehicles to their fleet. In 2022, Canada Post announced a $1 Billion investment to cut emissions and transform its vehicle fleet.

Canada Post

Canada Post is already incorporating electric vehicles, alternative-fuel vehicles, and charging stations into its fleet, and is looking to expand the use of those technologies. “Covid-19 has literally jumped e-commerce three or more years into the future. It is completely transforming our business,” says Chad Schella, the Crown corporation’s general manager for government and community affairs.

“We have one of the largest fleets in Canada and we are looking right now to modify that fleet,” says Schella. “We’re looking at how we transport mail in a way that is more green and to lower our carbon footprint.”

Governments could assist that effort by helping to build some of the infrastructure required for the transition, he says. “If there were commercial charging stations available in not just urban but suburban or rural settings that would make it more efficient for us to quickly adapt our fleet,” says Schella.

Canada Post joined the coalition because it is important to take a leadership role “with like-minded partners who are looking ahead to the future,” he says. “With UDSI we are able to share open conversations with other partners to see what challenges are common to us all, and also to identify common opportunities, and solutions for problems down the road.”

https://www.pembina.org/UDSI

The now struggling Canada Post reported that in 2023 it invested $305M in renewable energy and energy storage through the Canada Post Pension Fund.[1] In 2024, Canada Post reported that, “as of January 1, 2024, the company (Canada Post) switched to more than 90 per cent (SIC) renewable electricity in Saskatchewan. This followed our shift in 2023 to using more than 90 per cent (SIC) renewable electricity in Alberta.” Renewables drive up the cost of power. Did those moves put Canada Post on rocky financial ground? [2] Did Canada Post just buy offsets or long-term Power Purchase Agreements from Pembina’s offshoot, Business Renewables Centre? [3] How did it affect tax-paying customers and Canada Post operations?   Our productive SME sector has had to underwrite a $1 billion Canada Post investment in 353 hybrid vehicles, investments in renewables in Alberta and Saskatchewan, as well as lost tax pool money subsidizing the charity, Pembina Institute. This defeats productivity and slim profit margins of many businesses in the SME sector.

On Jan. 24, 2025, the federal government provided a $1.034 billion repayable loan to Canada Post to prevent its insolvency.[1] This was after months of a strike during the Christmas season, the busiest time of the year for retail SMEs, that are key customers of Canada Post.  Fair question – Was Canada Post attempting to meet its own UNPRI/Science Based Targets Initiative (SBTi)[2] climate targets and GHG reductions by not performing its mandate to deliver mail?  Canada Post claims it has been lauded by SBTi and CDP Worldwide for its climate action.  Both organizations are under investigation in the US for potential antitrust violations as part of the so-called “climate cartel.”[3]

Canada Post’s foray into climate action has been, in our opinion, a factor leading to the current situation of financial problems, accentuated by the now-rotating strike and labour disputes – all of which have critically damaged Canada’s most productive, energetic, job-creation engine; that of the Small and Medium-sized Enterprise business sector.  Businesses cannot be more productive if they cannot affordably and reliably deliver their products to waiting customers and receive important business documents or cheques in a timely way.

According to Innovation, Science and Economic Development Canada:

“As of 2023, small businesses employed 5.8 million individuals in Canada, or 46.5% of the total private labour force. By comparison, medium-sized businesses employed 2.1 million individuals (17.1% of the private labour force) and large businesses employed 4.5 million individuals (36.3% of the private labour force).” … “Over the 2017‒2021 period, SME contribution to gross domestic product (GDP) was 50.8%, on average, in the goods-producing sector, compared with 46.4% in the services-producing sector. In 2021, SMEs accounted for nearly half of the GDP generated by the private sector. Small businesses contributed 34.4% to GDP generated by the private sector, while the contribution of medium sized businesses was 13.9%.”[1] (bold added)

However, the SME sector has been denigrated for years, including by past Prime Minister Trudeau and then Finance Minister Bill Morneau, as tax evaders.  Solutions proposed for taxing entrepreneurs made their situation worse.[19]  The carbon tax was to be rebated to SMEs, as of this writing that situation is still in limbo. For small and medium-sized businesses, the cumulative rebate amounts of ~$4,000 can be critical to business survival.  Instead, they wait.

In terms of job creation, the SME sector is the most nimble and could be a strategic asset vis a vis productivity, especially at the moment when unemployment is rising in Canada and trade issues abound; again, climate change policies, including the industrial carbon tax (which is passed on to SMEs and consumers and which also burdens transportation) is a barrier to SME productivity, profit margins, and sales.

Robert Lyman was a federal public servant for 27 years, retiring as department manager of Transportation.  He was also a diplomat for 10 years.  His most recent report “Beyond Reason and Accountability: Major Projects Gone Awry and Why”[20] outlines the risks of the Carney government’s plan to fast-track projects deemed to be in “the national interests.”  Surely the many cancelled or withdrawn major energy-related projects of the past decade, which reflects the lost opportunity cost of US $1.741 trillion, as calculated by van den Berg, were all in “the national interest.”  The risk now is that the government will be choosing winners and losers based on climate change targets and green advocacy interests (i.e. like the EV battery plant fiascos) rather than projects well-grounded in Canada’s long-term interests.

Source: Excerpt from “Beyond Reason…” original source[21]

As Lyman explains in his report, any of the mega-projects listed above from the “Elbows Up for Climate Action,” group, demanded by mayors and councillors of municipalities, none of whom have a municipal mandate to address ‘climate change’ could become white elephants due to disastrous climate ideology. For instance, the demand for a national retrofit program may meet the same fate as that of the UK – a 98% failure rate,[22]  and as Lyman foretold in a previous 2019 commentary on housing retrofits, at untenable cost.[23]

The Prime Minister’s sudden turn toward reviving Keystone XL could be a welcome boost to the Canadian economy, but Keystone XL is unlikely to happen based on historical events,[24] and the entrenched ENGO/Tar Sands Campaign opposition to it.[25]  As noted in our previous Open Letter, THIS is a Green Trade WAR.

Excerpt of the Corporate Ethics Tar Sands Campaign Strategy document.

Canada’s Net Zero targets and climate change policies are destroying our economy, making it impossible to be more productive, competitive, or to be a reliable trade partner for our most important markets.  As we have pointed out in previous correspondence, the banking sector has been one of the most significant influencers vis a vis “climate catastrophe” thinking, which is not warranted, based on the current scientific evidence and the economic evidence herein.

As noted in our previous Open Letter to Governor Macklem, one has to question why the central bank Network for Greening the Financial System prefers to choose catastrophic outlier research like Kotz et al (2024) rather than research by Happer,[26] Lindzen,[27] Koonin[28] or van Wijngaarden,[29] all of whom note that carbon dioxide has benefits that are not accounted for by Kotz et al, and others.

As previously pointed out, the Social Cost of Carbon is actually a Social Benefit of Carbon (dioxide):

When the ECS is set to 1.6 degrees C to account for the [Urban Heat Island Effect] UHIE and the millennium cycle, and retaining the previous changes, the SCC is calculated by FUND to be about US-$13.07 per tonne CO₂ at a 3% discount rate and about US-$7.28 per tonne CO₂ at a 5% discount rate. That is, CO₂ emissions are currently quite net beneficial. This finding is significantly different from the estimates used by Environment and Climate Change Canada (ECCC) and calls into question virtually all of the expenditures made by governments and industry in Canada to reduce emissions.[30]

We hope you will henceforth publicly advocate for rolling back these destructive climate policies and carbon taxes – industrial and consumer, that you will advocate for stimulating policies to support and advance SME productivity, and to support efforts to find nuanced and constructive pathways to favorable trade relationships with our most important trade partners, rather than joining the “elbows up” bandwagon.

Feel free to contact us for more information.

Sincerely,

“Your relative position has improved,” he said. “And you, your cabinet describes this as a relationship that America has turned its back on.”

If Canada was really in a trade war with the US, Hoekstra said, the country would know it. https://www.cbc.ca/news/politics/us-ambassador-to-canada-disappointed-anti-american-campaign-1.7637534

[4] https://www.bbc.com/news/articles/c204ywyl4kvo

[5] https://www.dentons.com/en/insights/newsletters/2025/march/21/trump-2-0-navigating-change-in-canada/china-announces-tariffs-targeting-canadian-agriculture-and-food-products

[6] https://www.thebureau.news/p/white-house-alarm-over-britains-china?r=f96qu&utm_campaign=post&utm_medium=web&showWelcomeOnShare=false

[7] https://youtu.be/6pydKP8816k

[8] https://www.jccf.ca/epoch-times-if-these-3-bills-pass-canada-could-be-a-police-state-by-christmas/

[9] https://theccf.ca/liberals-revise-border-bill-following-ccf-pushback/

[10] https://open.substack.com/pub/boomfinanceandeconomics/p/net-zero-impossible-no-nation-has?r=f96qu&utm_campaign=post&utm_medium=web&showWelcomeOnShare=false

[11] https://www.pembina.org/UDSI

[12] https://www.canadapost-postescanada.ca/cpc/doc/en/aboutus/2023-Sustainability-Report.pdf (pg. 9)

[13] https://www.canadapost-postescanada.ca/cpc/doc/en/aboutus/2024-Sustainability-Report.pdf

[14] https://businessrenewables.ca/about

[15] https://www.ctvnews.ca/business/article/canada-post-gets-1-billion-loan-from-federal-government-amid-financial-struggles/#:~:text=The%20federal%20government%20is%20providing,to%20end%20the%20job%20dispute.

[16] It turns out that the SBTi is just another climate action proxy for carbon traders.  According to page 19 of the March 2025 version of “Corporate Net-Zero Standard” issued by SBTi: “The SBTi is incorporated as a UK charity, with a subsidiary, SBTi Services Limited, which hosts the SBTi’s target validation services.  Our founding partners are CDP, The United Nations Global Compact, the We Mean Business Coalition, the World Resources Institute (WRI), and the World Wide Fund for Nature (WWF).”

[17] “Florida Attorney General James Uthmeier announced the issuance of subpoenas to climate reporting and assessment organizations CDP and the Science Based Targets initiative (SBTi), launching an investigation into alleged potential antitrust violations and deceptive trade practices.” https://www.esgtoday.com/florida-ag-launches-investigation-into-cdp-sbti/

[18] https://ised-isde.canada.ca/site/sme-research-statistics/sites/default/files/documents/ksbs-2024-v1-en.pdf

[19] https://www.krp.ca/sorry-mr-morneau-canadian-entrepreneurs-are-not-tax-cheats

[20] https://blog.friendsofscience.org/2025/10/07/beyond-reason-and-accountability/

[21] https://elbowsupforclimate.ca/

[22] https://www.constructionbriefing.com/news/external-wall-insulation-installed-under-uk-government-scheme-had-98-failure-rate/8087060.article?zephr_sso_ott=mht7fL

[23] https://blog.friendsofscience.org/2019/05/13/look-before-you-leap-housing-retrofits/

[24] https://blog.friendsofscience.org/2025/10/10/the-great-deceiver-carney/

[25] https://www.counterpunch.org/2013/10/16/how-tides-canada-controls-the-secret-north-american-tar-sands-coalition/

[26] https://blog.friendsofscience.org/2022/07/04/according-to-the-physicist-w-happer-there-will-be-little-effect-for-a-doubling-of-the-rate-of-co2/

[27] https://friendsofscience.org/pdf-render.html?page=3028

[28] https://friendsofscience.org/pdf-render.html?page=2954

[29] https://friendsofscience.org/pdf-render.html?page=2963

[30] https://blog.friendsofscience.org/2025/09/28/the-us-doe-critical-review-of-the-impacts-of-greenhouse-gas-emissions-on-the-u-s-climate-a-simplified-version-of-ken-gregorys-comments/