Bank of Canada governor Tiff Macklem says that he has been in touch with United States Federal Reserve chairman Jerome Powell to discuss the risks posed by Anthropic PBC ‘s latest artificial intelligence model, Mythos, which has the power to amp up the speed and precision of cyber attacks by quickly identifying and exploiting vulnerabilities and has been flagged as a potential risk to financial stability.

Their discussions have been among a series of high-level communications between Canadian and U.S. officials on the topic, Macklem said Friday during a news conference from Washington, where he is attending meetings of the International Monetary Fund.

“The Minister of Finance has been talking to Secretary of the Treasury in the U.S. about the U.S. approach,” Macklem said. “I also spoke to chairman Powell … and I expect those conversations will be ongoing in terms of the substance of the issue.”

As Canada grapples with who should take the lead on cybersecurity and national security risks posed by the new technology, Macklem said the Canadian Financial Sector Resiliency Group, which is chaired by the Bank of Canada, has met twice this month, most recently a couple of days ago. Members include the Office of the Superintendent of Financial Institutions (OSFI), the Finance Department, the Canadian Centre for Cyber Security and technology experts from the big banks.  

The group was designed to deal with the risks posed by new technologies, Macklem said, but he added that it is too early to say how this particular threat will be handled.

“It’s early days, and I don’t think anybody knows the full implications at this point,” he said. “The good thing about this group is they are the experts and there are confidentiality agreements which allow sharing of information to the people who need it.”

Sources in Canada’s financial sector say government officials are keen for the Bank of Canada, which oversees the payments system, and OSFI, which oversees the banks, to take the lead on a response.

Macklem said the Bank of Canada’s primary role is to protect the central bank from any potential detrimental impacts of AI and to ensure the integrity of Canada’s payments system. But he acknowledged the broader risks to the financial system and the bank’s central role in the financial sector resiliency group.

“It’s critical that our systems are protected,” he said, adding that he is talking to François-Philippe Champagne, the minister of finance, about Mythos and AI generally.

“The world’s moving quickly; we need to keep up.… So those conversations are happening.”

Macklem said he was not able to say whether any Canadian companies or institutions have been given a preview of Mythos, a courtesy that has been afforded to some companies in the U.S., including JPMorgan Chase & Co.

“I don’t have a lot of specifics for you…. A number of large companies in the U.S. that have signed agreements do have access to it,” he said. “These are large technology companies, mostly.”

Macklem said AI risks and responses were discussed among international representatives at the IMF meetings, and he expressed relief that the framing, for now, is hypotheticals rather than an actual AI-driven cyber attack.

“New AI large language models in general … can expose the vulnerabilities much faster and exploit them much faster,” he said. “And that really puts a premium on having a mature cybersecurity posture.”

• Global financial watchdog to share insights on Anthropic's Mythos, says Tiff Macklem
• What is Anthropic's Mythos AI model and why does it have the financial world in a panic?

• Email: bshecter@nationalpost.com

Starting Monday, businesses hit with illegal tariffs imposed by the Trump administration and subsequently struck down by the United States Supreme Court will be able to apply for their money back.

U.S. Customs and Border Protection (CBP) is launching a new portal, called Consolidated Administration and Processing of Entries (CAPE), through which importers of record and customs brokers can apply for refunds.

On Feb. 20, the U.S. Supreme Court ruled that President Donald Trump exceeded his authority by invoking the International Emergency Economic Powers Act (IEEPA) to justify imposing tariffs on Canada and dozens of other countries.

As of March 4, CBP had collected approximately US$166 billion in IEEPA tariffs paid by 330,000 importers across 53 million customs entries, according to filings with the U.S. Court of International Trade.

The agency said in a filing on April 14 that up to 82 per cent of customs entries with IEEPA duty payments, worth US$127 billion, are eligible to receive refunds electronically.

“CAPE is designed to consolidate refunds of IEEPA duties, including interest, rather than processing refunds on an entry-by-entry basis,” CBP said on its website. “CBP plans to implement CAPE through a phased development approach, adding more functionality in subsequent phases for more complicated scenarios.”

The first phase will accept requests for refunds on liquidated customs entries that have been finalized within the last 80 days and on unliquidated entries that are still open and under review.

CBP said more than 56,400 importers have registered to receive refunds as of April 9.

Jesse Mitchell, director of business development for customs brokerage Strader-Ferris International, estimates that at least 200 of his firm’s Canadian client companies will be filing for IEEPA tariff refunds and are eager to start the process of recouping their money.

Mitchell said while the filing process looks relatively straightforward, it will generally be easier for U.S.-based companies that have American bank accounts, which is a requirement to receive refunds through CAPE.

Canadian companies often act as the importer of record on U.S.-bound shipments and pay all customs and duties to make it easier for American customers to buy their products, Mitchell said. Many work with U.S. customs brokerages to manage the clearance process on their behalf, which can include handling the payment of U.S. duties, tariffs and taxes.

Mitchell said Canadian companies will need to get a U.S. bank account or work with their customs brokerage to get their refund. The process will also be more complicated for businesses that work with multiple brokerages to handle different types of shipments.

“If they have a lot of volume, that’s a lot of tariffs that could have been paid by each of those companies,” said Mitchell. “Coordinating the refunds between all the companies, if they need to use the brokers to file, will take time.”

CBP said that once a claim is approved, refunds will generally be issued within 60 to 90 days.

While there’s more work ahead for Canadian companies and customs brokerages, Mitchell said the new portal is good news for businesses that paid IEEPA tariffs.

“It seems like things are moving in a very positive direction, and the money is going to start flowing out to companies very soon,” he said.

• 'Bleeding businesses': Number of active companies that depend on U.S. is dropping in Canada
• The United States is losing its grip on Canada's steel market

• Email: jswitzer@postmedia.com

Canadians manufacturers of products ranging from sport and all-terrain vehicles to tools and moulds to transport trailers could be forced to curtail production after a tariff change imposed by the United States dramatically increased the cost of exporting their products.

The plight of Quebec-based Sea-Doo maker BRP Inc. , which announced this week that its tariff costs would shoot up by more than $500 million this year, drew attention to the little noticed change that went into effect April 6.

“The size of the cost impact fundamentally changes the profitability profile for BRP and injects a high degree of uncertainty into the outlook,” Cameron Doerksen, an analyst at National Bank Financial, wrote in a note to clients, slashing his target price for BRP stock to $80 from $125. BRP’s shares finished the week down 24 per cent after the company’s announcement, which included suspending its financial guidance for the year.

The U.S. modification to an earlier tariff on Canadian steel and aluminum means the entire value of products made primarily of those metals are now subject to the levies, rather than just the value of the steel and aluminum parts. While the levy is lower — 25 per cent instead of 50 per cent — it is calculated on the total value of the product, which means the exports cost substantially more.

The change casts doubt on the viability of hundreds of millions of dollars in revenue for exporters of transportation equipment such as trailers, said Jean-Marc Picard, general Manager of the Canadian Transportation Equipment Association.

“The impacts are massive. The latest tariffs are basically preventing some large Canadian companies from shipping (and) selling to the U.S. going forward,” he said. “Orders are being cancelled and production is curtailed in some cases and jobs are impacted.”

Picard said some manufacturers are continuing to ship to U.S. because of contract obligations, but their profits will disappear.

“The trailer manufacturers are impacted the most and then you have all the suppliers impacted as well,” he said, adding that this pushes the revenue at risk far higher than the $500 million he estimates for the manufacturers in his association. “Axles, suspensions, lights, metals … the list is long.”

Picard said there doesn’t appear to be an appetite in Ottawa to impose reciprocal tariffs, so U.S.-made trailers continue to ship freely to Canada.    

“They ship over $1 billion in van trailers per year,” he said. “Not only we are unable to ship to U.S. because the numbers don’t work but the U.S. is also eating our lunch in Canada. This has to stop.”

Dennis Darby, chief executive of Canadian Manufacturers and Exporters (CME), said hundreds of companies across Canada are affected, and the new tariff regime is hardest on the small and medium-sized businesses in his association, which rely on U.S. buyers and have little recourse.  

Some companies may qualify for federal government programs set up to support large steel and aluminum companies hit by tariffs, he said, adding that his organization is lobbying to ensure aid remains in place and that the latest escalation is addressed in upcoming Canada-U.S.-Mexico Agreement negotiations.

If that doesn’t happen, manufacturers may have no choice but to relocate production to the U.S., he said.

“We polled our members even six months ago, and somewhere in the range of 40 per cent were at least looking at what it would take to … move some production to the U.S.,” he said. “I think that if this persists, if we aren’t able to provide some clarity or hope to Canadian companies through the CUSMA negotiation … you will, over time, see companies pivoting their production where they can to the U.S.”

Darby said many affected companies, which stretch from British Columbia to Nova Scotia, were reluctant to go public with their concerns, at least for now. But BRP is a member and the calls his organization has received from hundreds of other businesses suggests the latest tariff jolt will eat into revenue and profits, hamper investment and hurt productivity.

“What’s happened is people are sitting on their hands because of the uncertainty, and that’s what continues right now. That’s the worst of all worlds,” he said.

William Pellerin, a partner in the international trade group at McMillan LLP, said companies that are affected by the latest change — including tool and mould makers and manufacturers of tractor trailers and ATVs — cannot seek protection via CUSMA exemptions because they don’t apply to steel derivative tariffs imposed by the United States.

“ Other than taking on a ton more debt, there is not much these companies can do, or that government can do, other than attempt to negotiate away these U.S. tariffs,” he said.

“ Absent some negotiated outcome, the result is likely to be that many of these companies will relocate operations to the United States or retrench operations and lay off workers.”

Pellerin said the latest change marks a significant escalation in the trade war, and is extremely painful for Canadian manufacturers.

“We have seen Canadian manufacturers make the difficult decision to cease all  exports to the United States – sales are drying up,” he said.

• Companies hit with Trump's illegal tariffs can apply for refunds starting next week
• Rise in manufacturing sales in February 'not a sign of better things to come'

• Email: bshecter@nationalpost.com

Canadian consumers have not reduced their spending in the face of a struggling economy, but they are are being more cautious and selective with their money, according to new transaction data from Moneris Solutions.

The payment processing company, which handles roughly one in three transactions in Canada, said total domestic spending was essentially flat year over year in the first quarter of 2026, down only 0.27 per cent, while the average transaction size rose 0.18 per cent.

The data suggest consumers are still participating in the economy but are becoming more selective about what they buy, prioritizing essentials, value, quality and discretionary experiences.

An Angus Reid survey commissioned by Moneris said nearly half of Canadians believe the economy is struggling, and only 13 per cent expect to see improvement over the next six months. Compared with June 2025, the findings mark a 15-point rise in economic concern and seven-point drop in optimism, the company said.

Meanwhile, 43 per cent of respondents said they expect to reduce spending on non-essential items.

While overall spending remains stable, a closer look at spending by category shows a clear reallocation of consumer dollars.

Grocery purchases rose 2.6 per cent year over year, while spending at mass merchandisers such as Walmart and Costco increased 6.9 per cent. Department stores, including Hudson’s Bay and Simons, saw purchases fall eight per cent, while apparel and household spending each declined two per cent.

This suggests Canadians are prioritizing essential and affordable retail items while pulling back from more discretionary purchases.

One type of discretionary spending Canadians have not given up on is entertainment.

Entertainment spending rose 11 per cent in the past year, with average transaction size up 17 per cent, indicating Canadians still value experiences. Airline spending also increased 11 per cent, though with smaller average transaction sizes, pointing to potentially shorter or more cost-conscious travel .

The data also suggest shifts in foreign spending are changing how tourists experience Canada, with tourists allocating more of their budgets to activities rather than accommodation. Entertainment spending by visitors rose 21 per cent, while hotel spending declined nine per cent.

Regional spending trends were mixed across Canada. Alberta and Saskatchewan each reported 1.24 per cent increases in total spending, while Quebec had a more modest rise of 0.23 per cent. Manitoba recorded the largest decline at 2.14 per cent, followed by British Columbia at 0.86 per cent and Ontario at 0.57 per cent.

Moneris’s monthly data shows a gradual improvement through the quarter. Domestic spending declined 2.35 per cent in January, improved to a 0.63 per cent decline in February, and turned positive in March with a 0.73 per cent increase.

Despite shifts in category spending, Moneris says the broader picture is one of adjustment rather than withdrawal.

“Businesses can adjust to a more cautious, pragmatic consumer by focusing on meaningful customer experiences that prioritize value and quality and reduce friction as much as possible,” said Sean McCormick, vice-president of business development, data services at Moneris.

• Three steps to make filing your tax return to the CRA less painful
• Forcing people to pay a moral tax if they leave the country won't inspire them to stay

Prime Minister Mark Carney is inviting the world’s largest investors, including top CEOs, entrepreneurs, and global business leaders, to the “first-ever” Canada Investment Summit in Toronto this September as part of his plan to unlock $1 trillion in new investments over the next five years.

The summit — taking place on Sept. 14 and 15 in Canada’s largest city — is focused on attracting new investment to support nation-building projects and grow the economy, according to the Prime Minister’s Office.

“Canada has what the world wants. We’re an energy superpower, with the most educated workforce in the world and rock-solid fiscal strength,” Carney said in a statement.

“The first-ever Canada Investment Summit will capitalize on those advantages to help drive billions in new investments into Canada. That means more growth for our businesses, more high-paying career opportunities, and a stronger, more independent Canadian economy for all.”

• Carney suspends gas tax as Iran war drives up energy costs
• Globe-trotting Carney turns to allies as economic pressures build in Canada

The federal government is hosting the summit in partnership with the Canada Pension Plan Investment Board (CPPIB) and the Public Sector Pension Investment Board (PSP Investments).

“We believe Canada is at its best when it brings together public and private sector leaders to showcase the country’s strengths, deepen commercial relationships, and catalyze lasting economic value,” CPPIB chief executive John Graham said.

The federal government says it has already secured $97 billion in new investments across 20 new partnerships in the past year.

• Email: bcousins@postmedia.com

Economists are expecting the high price of gas to “shock” the consumer price index (CPI) when Statistics Canada releases its March inflation report on Monday.

Gas prices spiked 21 per cent between February and March as the war in Iran and resulting near-closure of the Strait of Hormuz reduced the flow of oil from the Middle East and pushed up global energy prices .

The month over month price jump for gas is the highest on record for data dating back to 1950 and tops the 17 per cent rebound from pandemic-era lows between April and May 2020, said Douglas Porter, chief economist and managing director at Bank of Montreal (BMO).

“Even during Russia’s invasion of Ukraine, we never had a month that was (higher than) a 12 per cent increase,” he said. “So that is going to be a bit of a shock in next week’s CPI.”

Canada’s headline inflation rate rose 1.8 per cent on a year-over-year basis in February. BMO forecasts it will come in at 2.6 per cent in March and above three per cent in April.

Porter said the federal government temporarily suspending the fuel excise tax on gasoline starting April 20 is a “big step in the right direction,” but the savings of 10 cents per litre will only counter a portion of the run-up and that relief could be wiped out if prices rise further.

Energy costs are just one factor that affects grocery bills, but Porter said the energy price spike does threaten some of the “modest progress” on grocery inflation seen in recent months.

“At this point, we’re expecting food prices  on average to rise a little bit more than four per cent this year,” said Porter. “I think the risk is somewhat to the high side of that call.”

Food would be among the first items affected by sustained high oil prices, said Nathan Janzen, assistant chief economist at Royal Bank of Canada (RBC). However, he said it would happen over a period of months, not weeks, as businesses are typically hesitant to pass on price increases to their customers until they need to.

RBC expects inflation to come in at 2.5 per cent in March and above three per cent in April.

Janzen said food price growth as measured in the CPI will probably slow in March due to distortions from last year’s GST/HST holiday, which removed the federal portion of sales tax on specific items between Dec. 14, 2024, and Feb. 15, 2025, including restaurant meals and certain grocery products.

However, Janzen noted that grocery prices have already been running above the broader rate of inflation for some time. Last month, Statistics Canada said grocery prices have climbed 30 per cent over the last five years.

“The longer this conflict drags on, the more risk you have of adding to that,” said Janzen. “Even if you’re just marginally adding to food price growth, it’s adding to prices that are still growing pretty rapidly.”

Overall, economists don’t expect to see the same widespread inflation that resulted from the commodity shock after Russia invaded Ukraine in 2022.

National Bank of Canada senior economist Alexandra Ducharme said while the impact of high energy prices could spill over into core measures in the second half of 2026, the bank currently expects inflation to be “contained” because the rest of the economy isn’t doing well.

“The latest jobs data was not stellar. We’re seeing a weak housing market, moderate credit growth and households are still facing a mortgage repayment shock,” she said. “We’re not seeing inflation pressures really building up in the economy right now.”

National Bank of Canada expects inflation to hit 2.6 per cent in March and 3.2 per cent in April.

BMO, RBC and National Bank all predict the Bank of Canada will look past the temporary inflation pressure and maintain its benchmark interest rate at 2.25 per cent at its next announcement on April 29. They also expect rates to remain unchanged for the rest of 2026.

Porter said the central bank will be “gritting their teeth through the entire year” as it deals with the soft housing market and uncertainty around the upcoming review of the Canada-United States-Mexico Agreement.

Janzen said the oil price shock is reducing consumers’ purchasing power, which has a significant impact on lower income households.

“If you’re hiking rates in that environment, you’re really just adding to those challenges that are already building in the economy.”

• Canada's inflation rate could spike to 3% on rising gas prices from Iran war, economists warn
• Canada's inflation rate cools more than expected

• Email: jswitzer@postmedia.com

For years, Canada Post Corp. has been drowning in debt amid rising operating costs, competition from private delivery giants and a drastic plunge in letter mail volumes. On Thursday, Canada’s biggest postal operator laid out its five-year plan to convert addresses that receive door-to-door delivery to community mailboxes and modernize its retail network by closing some post office locations. Here’s how these changes could be implemented, where Canada Post stands in its decision and what it means for businesses.

Why is Canada Post making these changes?

In November 2025, Canada Post reported a record loss before taxes of $541 million, which it said was the largest quarterly loss in the company’s history. While it blamed labour uncertainty for driving its customers to competitors, Canada Post’s financial problems had been building for years — it had racked up more than $5 billion in losses since 2018 amid plummeting mail volumes.

“Canada Post is a very sick company,” said Marvin Ryder, an associate professor at McMaster University’s DeGroote School of Business. “If this was a private sector company, I would describe it to you as being in a death spiral.”

However, as a federal Crown corporation it has benefited from two billion-dollar bailouts from the Government of Canada in the past two years to keep it operational, Ryder said.

“No post office in the world has been allowed to die,” he said. “But the government does not want to keep pouring money at the rate of a billion dollars a year into the corporation, so it needs to do dramatic restructuring .”

In September, Joël Lightbound, minister of government transformation, public works and procurement, called for a series of measures to modernize the company and stabilize its finances amid an “existential crisis.”

Lightbound said converting the remaining four million addresses that currently receive door-to-door delivery to community mailboxes would generate nearly $400 million in savings each year. He also said adjusting delivery standards so that non-urgent mail can move by ground instead of air will save the corporation more than $20 million each year.

He added the government would lift the moratorium on rural post office closures, which was first imposed in 1994 and covers nearly 4,000 locations.

Ryder said the plan won’t necessarily turn Canada Post into a healthy, profitable company, but is “a step in the right direction.”

In April, following initial meetings with its unions, Canada Post unveiled a five-year plan for community mailbox conversions and to modernize its retail network. The corporation said its retail revenue has dropped 30 per cent since 2021 as Canadians visit post offices less frequently and make fewer in-store purchases.

Are there problems with installing more community mailboxes?

It is clear from existing literature that community mailboxes will save money but the proposal raises important questions about how they will be implemented, said Richard Shearmur, a professor at McGill University’s School of Urban Planning in Montreal.

About three-quarters of Canadians already get their mail through community, apartment or rural mailboxes, while the remaining quarter receive door-to-door delivery.

Densely populated cities will require a large number of community mailboxes to be installed, Shearmur said. He estimated there could be one mailbox “about the size of a bus stop” per block with about 100 individual compartments. If these mailboxes are placed along sidewalks, it could increase congestion and create obstacles for pedestrians, particularly those with mobility devices or strollers.

In its April update, Canada Post acknowledged that converting dense urban core areas comes with additional challenges, and pushed the timeline for such areas to “later stages of the multi-year conversion program.”

Outside cities, Canada Post said it would protect access to “vital postal services in rural, remote and Indigenous communities,” but planning the location of community mailboxes will be key, said Shearmur.

“The question is: Is the community box going to be in the village, or is it going to be at the intersection of the Trans-Canada Highway?” Shearmur said. “That makes a 30-kilometre difference.”

The Canadian Postmasters and Assistants Association (CPAA), a postal union that works in more than 3,000 rural post offices across the country, said in an email that though details of the transformation plan remain limited, “we understand that the intention is that service in rural, remote, and Northern communities will be protected.”

CPAA’s national president Dwayne Jones said demand for postal services has continued to climb in rural and remote communities. And those residents already rely on centralized delivery models, including post office pick-up at a CPAA office, he said.

“The more significant issue is ensuring continued access to a local post office and maintaining reliable service overall,” he said.

How far apart is Canada Post from its unions’ positions?

In March, Canada Post said it was taking steps toward its proposed plan, starting by reaching out to its unions.

“We are preparing for consultations regarding transformation initiatives with our unions,” said a Canada Post media spokesperson in an email. “We want to conclude those important initial discussions before we share more details publicly.”

Currently, CPAA’s Jones said the union will be actively participating in the consultations and is seeking further clarity on how assessments will be conducted, what criteria will be used and how community input will be considered.

In September, following Lightbound’s announcement about the proposed changes, the Canadian Union of Postal Workers (CUPW) called the announcement an “attack on good jobs and public services” and launched a strike in protest.

McMaster’s Ryder said Canada Post’s current priority is likely the upcoming ratification votes with the CUPW regarding workers’ wages and benefits, before its consultations over the restructuring changes.

“This is not the right time to consult,” the CUPW said in March in its response to Canada Post’s March update. “This latest move by Canada Post and the government is yet again another attempt to derail our (labour) negotiations process.”

CUPW further noted that it had been four months since Canada Post provided an outlined plan to the government, which has not yet been made public or accessible to the union.

How long could it take to install community boxes and do municipalities have a say?

In April, Canada Post said it expects its national conversion program to take about five years, with different areas moving to community mailboxes each year. It is initiating discussions with 13 communities that contain about 136,000 addresses in total, such as Ottawa, Sept-Îles, Que., and Winnipeg.

Canada Post expects to begin conversions in late 2026 and early 2027, adding that a conversion from home delivery to a community mailbox typically takes months.

But McGill’s Shearmur said it could take significantly longer if Canada Post wants to organize discussions with representatives of municipalities and groups that may be affected by its proposed changes.

“If they want to roll it out in the next 24 to 48 months without doing that, I think that there will be a lot of opposition, but they ultimately do have the power,” he said. “They’re under financial constraints, and so they’re in a difficult place, too.”

Canada Post has the legal right to progress with its plans without listening to municipalities, as long as it can justify the changes are important for postal delivery, Shearmur said, though he added such a move would be damaging.

How could these changes affect businesses?

The transition to community mailboxes would have little impact on most businesses, as many have already switched to Canada Post’s competitors amid service disruptions and speedier delivery options elsewhere, McMaster’s Ryder said.

However, private shipping and delivery companies mainly operate in urban and suburban markets, he added. Canada Post, on the other hand, is mandated to serve every household in Canada, including in rural areas, and charges lower rates compared with its competitors.

“It’s going to hit rural businesses harder,” said Shearmur. “Small businesses do not have access to these alternative private services, because it’s just not commercially viable for these services to work in rural areas.”

Dan Kelly , chief executive of the Canadian Federation of Independent Business (CFIB) said in an email that the CFIB is “generally supportive” of this change. Since households that already receive mail through community mailboxes still have larger packages or those that require a signature delivered to the door, the impact to businesses should be “fairly small” if this practice continues, Kelly said.

Another potential change that could benefit small businesses is weekend parcel delivery, Kelly said. Canada Post’s latest update on its negotiations with CUPW included a tentative agreement regarding a weekend parcel delivery model (Canada Post currently makes deliveries Monday to Friday).

The other part of the restructuring plan includes closing some post office locations. Canada Post said it would start with post office closures in urban and suburban areas that are currently over-served, and is conducting market reviews to gather data on local post offices.

Ryder said this could possibly lead to more postal kiosks opening in retailers instead.

While Canada Post could benefit from the cost savings, Ryder said the addition of a kiosks could also improve convenience for consumers and increase foot traffic in stores.

However, there are other, less tangible consequences for small-town communities that rely on the post office.

“Since the moratorium was lifted, a number of CPAA offices have already closed or have been under consultation for closure,” said Jones, calling for guardrails to protect rural service.

“For many communities, the post office is a critical piece of infrastructure that supports access to essential goods and services, small businesses and community connection, and in some cases, represents the only local access point for government and financial services.”

• Email: slouis@postmedia.com

• Canada Post, union reach tentative deal ahead of holidays
• Canada Post workers to stop delivering flyers in latest strike escalation

The federal government gave financially stretched Canadians a break at the pump a year ago after axing the much-despised carbon tax on gasoline, but those gains and then some have evaporated.

Economists and oil and gas analysts now expect drivers could be looking at a “new normal” of higher energy prices thanks to a greater risk premium for oil even after the dust settles in Iran .

“The new normal is not likely to be US$60 a barrel,” Avery Shenfeld, chief economist at CIBC Capital Markets, said in a podcast released on Thursday. “There’s likely to be a remaining risk premium in the energy market, but, say, somewhere between US$75 and US$80 a barrel in the course of the fourth quarter; that’s the base for our forecast.”

Prior to the outbreak of the war, the price for a barrel of West Texas Intermediate (WTI), the North American benchmark, was about US$60 a barrel. Prices then rose nearly 70 per cent to a high of US$112.95.

Oil prices rose after Iran effectively closed the Strait of Hormuz, a major gateway for oil and gas supplies to Europe and Asia, removing an estimated 10 million barrels a day of supply from global markets, according to Oxford Economics Ltd. 

Iran announced Friday that the Strait of Hormuz was completely open to commercial shipping. Prices for WTI fell from nearly US$95 to just under US$85.

“When (the war) does come to an end, that risk premium will be higher,” Randy Ollenberger, managing director and oil and gas analyst at BMO Capital Markets, said during a web session with investors, pegging the premium at US$10 from US$5 previously.

Oil futures were signalling to expect higher oil prices through 2026 and 2027, Scotia Capital Markets said.

“The futures curve remains elevated at sustainably higher prices throughout 2026–27,” Derek Holt, vice-president of economics at Scotia Capital, said in a note last week, with futures pricing WTI at more than US$70 a barrel.

Near-term prices reflected the clampdown in the Strait of Hormuz, Douglas Porter, chief economist at Bank of Montreal, said.

“Where you get into talking about a risk premium is when you get two years from now, or maybe even a year from now,” he said, adding that the one-year future price for Brent crude, another oil benchmark, is US$80, up from US$67 just before the war began.

But Porter said an elevated risk premium and higher prices aren’t “foregone conclusions,” though that “is the signal markets are sending to us.”

He said the energy markets reversed themselves in several previous shocks, including the commodity supercycle when WTI prices rose to US$150 a barrel in 2008 and then crashed back down for reasons separate from what spurred the increase.

Similarly, prices in 2014 rose above US$100 on fears that the terrorist group Islamic State of Iraq and Syria would wreak havoc across the Middle East, leading to a permanent increase in oil prices. That was not to be, either.

Porter said oil markets are finely balanced and even a slight drop in demand could have a significant impact on prices.

“The risk is, yes, oil prices will on a semi-permanent basis be pushed up by this,” he said. “You could definitely come up with a scenario where prices retreat very quickly over the next year.”

• Posthaste: Canada faces an entrepreneurial ‘drought’ as more businesses close than open
• Posthaste: What Mark Carney's gas tax cut could mean for the Bank of Canada

Spring is traditionally the busiest time for real estate and this year, the stakes couldn’t be higher. Follow our Spring Real Estate Survival Guide series as we unpack some of the most pressing questions buyers and sellers are grappling with, plus expert advice on how to navigate the reality of a slower market. Read the series here

 Sign up here to get Posthaste delivered straight to your inbox.

• Today’s data: Canada housing starts, international securities transactions

• Why first-time homebuyers are still treading cautiously this spring
• AI helped CIBC save 1.2 million hours, cut mortgage approval times at TD, CEOs say
• Three steps to make filing your tax return to the CRA less painful

Gerry is in his late 70s and retired. He and his wife have saved enough to live comfortably for the remainder of their lives. The dilemma? The large majority of  their retirement investments are in solid blue-chip Canadian stocks that have historically never missed dividend payments. However, the market value is fluctuating significantly given current geopolitical factors. Gerry wants to know if it would be wise to cash in all their investments and purchase guaranteed investment certificates? Keep reading here to find out if they should make the switch or stay the course.

Interested in energy? The subscriber-only FP West: Energy Insider newsletter brings you exclusive reporting and in-depth analysis on one of the country’s most important sectors. Sign up here.

McLister on mortgages

Want to learn more about mortgages? Mortgage strategist Robert McLister’s Financial Post column can help navigate the complex sector, from the latest trends to financing opportunities you won’t want to miss. Plus check his mortgage rate page for Canada’s lowest national mortgage rates, updated daily.

Financial Post on YouTube

Visit the Financial Post’s YouTube channel for interviews with Canada’s leading experts in business, economics, housing, the energy sector and more.

Today’s Posthaste was written by Gigi Suhanic with additional reporting from Financial Post staff and Bloomberg.

Have a story idea, pitch, embargoed report, or a suggestion for this newsletter? Email us at  posthaste@postmedia.com .

Bookmark our website and support our journalism: Don’t miss the business news you need to know — add financialpost.com to your bookmarks and sign up for our newsletters here

Prime Minister Mark Carney in March put the North at the centre of Canada’s economic and security agenda when he announced more than $40 billion of investments in defence, economic corridors and electrification in our Northern and Arctic region.

For the Northwest Territories , that commitment has begun to take shape with the referral of three nation-building projects to the Major Projects Office: the Mackenzie Valley Highway, the Arctic Economic and Security Corridor and the Taltson Hydro Expansion. The referrals signal that these projects are not just priorities for the North, but for Canada.

These projects will mark the largest expansion of Canada’s enabling infrastructure since the construction of the transcontinental railway and will set the stage for the country’s transition into an energy superpower, a global supplier of choice for critical minerals and an Arctic power instead of an Arctic nation.

The significance of the NWT’s mineral and petroleum deposits is well-established , but a lack of basic infrastructure has historically kept some of our most resource-rich regions out of reach, driving up the costs of exploration and development and creating roadblocks for investment.

All that is about to change, and this investment matters as much to Canadians and global investors as it does to NWT residents.

The Mackenzie Valley Highway will redefine the territory. The 800-kilometre-long all-season road through the Western Canada Sedimentary Basin to the Arctic coast will provide unprecedented access to some of Canada’s largest and least developed oil and gas deposits, lower the costs of doing business and create a direct link to tidewater in the Beaufort Sea.

To the east, the Arctic Economic and Security Corridor will connect the NWT and Nunavut with a 400-kilometre all-season road through one of the most mineral-rich regions on Earth: the Slave Geological Province.

This region contains 19 of the NWT’s 23 minerals found on Canada’s designated critical mineral list , along with proven deposits of precious metals, base metals, and rare earth elements. The corridor will connect to a deep-sea port on the Northwest Passage, in the midpoint between Noom and Nuuk.

The NWT’s third major project, the Taltson Hydro Expansion , will double the territory’s hydro capacity, build redundancy, deliver reliable power to 70 per cent of its residents and create the opportunity to power the Arctic Economic and Security Corridor.

Taken together, these infrastructure investments position the NWT as Canada’s next investment frontier. But realizing the territory’s potential will take more than public investment; it requires an efficient regulatory system that is clear, predictable and provides certainty.

The NWT in 2014 took over responsibility for its land and resources from the federal government, resulting in a “one-project, one-review” co-management system. Grounded in modern treaty commitments, that system balances robust environmental protections while advancing sustainable development for the benefit of northerners.

The Government of Canada, the Government of the Northwest Territories and Indigenous governments each have a seat at the table, with shared responsibility for decisions. Similarly, resource legislation is co-developed by the Government of the Northwest Territories and Indigenous governments.

This type of collaboration is a strength. It means that issues are identified early, expectations are clear and projects move forward with stronger foundations and broader support. In the NWT, partnerships with Indigenous governments are not a barrier to development; they are how development gets done.

The result is a jurisdiction that offers a combination that is increasingly difficult to find: political stability, clear regulatory processes, strong environmental oversight and a resource base with global demand.

Alongside the generational investments in major infrastructure projects that will lower costs, unlock stranded assets and improve project economics, it becomes increasingly evident that investing in the NWT is not speculation, but a strategic bet on Canada’s next phase of growth.

R.J. Simpson is Premier of the Northwest Territories.

• Opinion: Diamonds may be forever but diamond mines aren’t. N.W.T. needs to find a replacement fast
• William Watson: Politicians are no better investors than the rest of us

Standing next to about 50 whirring fans responsible for cooling a vast room of stacked computer servers, a Microsoft Corp. executive highlights how a data centre — almost as big as 15 hockey rinks — being built in Vaughan, Ont., will annually need just about half an Olympic swimming pool’s worth of water to run.

A few steps away in a separate room, Ed Pomerleau, vice-president of data centre operations in the Americas, then explained how a row of dampers lined across the wall is controlled by “sophisticated” software that automatically makes them open and close to control the airflow and the temperature inside the facility.

Data centres host thousands of supercomputers that conduct complex calculations and are increasingly in demand worldwide as the use of artificial intelligence (AI) accelerates, but critics say they also put immense pressure on electricity grids and use a lot of water, forcing companies to defend their presence rather than just promote their capabilities.

An average mid-sized data centre can use about 1.4 million litres of water a day to cool down its infrastructure, according to Verisk Maplecroft, an England-based risk consultant. Centres can also quickly consume more than 100 megawatts of electricity, which is equivalent to the annual consumption of 100,000 households, the International Energy Agency has said.

Microsoft has committed to investing $19 billion in Canada to expand its existing data centres in Ontario and Quebec, and the Vaughan data centre — called YTO 11 — is expected to be fully operational in the second half of this year. But Pomerleau said the data centres will not raise electricity prices for Canadians or adversely impact their water supplies.

“We wouldn’t build a data centre where the utility provider couldn’t sustain,” he said during a press conference following a tour of the data centre in April. “We invest in it as well by putting up transformer plants, etc.”

Microsoft Canada Inc. president Matt Milton said the company’s data centres being built in Canada are not some of the “large gigawatt centres that you may hear about” and that the energy used in the Vaughan facility will be “dramatically lower” since it will not be used to train AI models, but run everyday AI services using already-trained systems, which is referred to as “inference” in the industry.

But Ebrahim Bagheri, a professor at the University of Toronto whose research area includes AI, said it doesn’t matter whether a data centre is meant for training or inference, “it’s going to put a huge electricity demand” on the grid. 

He said inference is much less demanding in terms of electricity consumption, but the scale of inference goes far beyond the scale of training.

“If you have a billion prompts per day, you will be looking in the order of above 50 gigawatts, whereas training a frontier model for three to four months is around 20 to 30 gigawatts,” he said.

As for water usage, Microsoft said it intends to use Canada’s climate to its advantage by relying more on the cold air outside rather than water for most of the year.

It intends to rely on cold air until the temperature inside the data centre reaches 29.4 C, at which point it will turn to water, which is run multiple times through its system.

But Bagheri said data centres also indirectly increase water usage at local power plants as electricity use rises since they also need large amounts of water for cooling and other purposes.

“If one were to assume a billion inference queries per day … you would very quickly go from half an Olympic swimming pool in direct water footprint to approximately about 200 Olympic swimming pools in indirect water consumption,” he said.

Despite the criticism of data centres, Bagheri said building more of them can be a “real benefit” in terms of protecting data, reducing latency and providing better services, as well as allow Canada to rely on its own AI supply chain as opposed to infrastructure abroad.

Alistair Speirs, a general manager with Microsoft Azure’s online computing platform, said building data centres within Canada means Canadian businesses can deploy AI at the same speed as their competitors without “shipping their most important IP to other jurisdictions.”

Once operational, he said the data centre in Vaughan, in combination with Microsoft’s other facilities in Canada, is expected to support the AI endeavours of almost “everyone” in Canada.

“Those using Microsoft applications will use these data centres,” said Speirs, who has been to Microsoft’s 400 data centres worldwide. “There are hundreds of thousands of commercial customers in Canada that use the cloud services.”

There are already a host of large Canadian businesses that rely on Microsoft’s AI technology.

For example, 25,000 employees of Toronto-Dominion Bank in Canada and the United States use Microsoft Copilot, an AI-powered assistant for their daily work. Microsoft said Bank of Montreal employees run risk calculations faster and at 30 per cent less cost after partnering with Microsoft Azure. And Bank of Nova Scotia used Copilot to build a system of specialized AI agents to create a better way to provide clients with insight.

In the retail sector, Canadian Tire Corp. Ltd. , after recognizing that about 80 per cent of its in-store transactions start online, built an AI system using Microsoft software to help customers make a better connection between the two selling channels. Similarly, Ottawa Hospital used Copilot to reduce its administrative burden, with staff reporting a 70 per cent reduction in burnout as well.

The reliance on AI is bound to increase further, Microsoft said. About 1.2 billion people have used AI-related technologies in the past three years and AI is also projected to annually add $180 billion to Canada’s economy by 2030.

To keep up with this “pretty phenomenal adoption curve,” as Speirs puts it, the world needs more data centres. Some of the equipment is designed to simply store data that’s uploaded online, while others may be responsible for hosting the AI apps that people use. Either way, they are built to be disaster-resilient and require hundreds of skilled technicians to be maintained.

For now, the facility in Vaughan has yet to be fully stacked with servers and is not fully operational, which is a big reason why the noise level there was below 85 decibels during the tour. That’s below the danger level, so visitors don’t need to wear headphones or take other protective measures. But that won’t be the case for long.

• Microsoft vows data centres will not hike Canadians' water and electricity bills
• Quantum computing is a once-in-a-lifetime opportunity for Canada. Here's how we can grow the industry at home

“Trust me, when this room is full, it will be over 85 decibels,” Pomerleau said.

Bagheri said building more data centres is something that has become inevitable.

“You have to do it,” he said. “But the big question is do we actually have a plan to build a sustainable, environmentally friendly infrastructure?”

He said he hasn’t heard of one as yet, but points out the AI boom is something that has happened very quickly and that it would have been difficult to actually forecast the demand even a year or two ago.

• Email: nkarim@postmedia.com