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TORONTO — Ontario Teachers’ Pension Plan is closely monitoring the potential for higher tariffs to slow the global economy, but it thinks that “cooler heads are going to prevail” before that happens, OTPP chief executive Ron Mock said Tuesday.

Ontario Teachers’ core portfolio is well-diversified and in good shape to deal with unexpected developments, having ended 2017 with 9.7 per cent return on investment and a fifth consecutive annual surplus, Mock said.

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Referring specifically to the ongoing NAFTA talks between Canada, the United States and Mexico and the recent exchange of tariff threats between the United States and China, Mock said there’s a lot of “noise” in the news.

“While there’s a lot of blustering and negotiating that’s going on, we’re firmly convinced that cooler heads are going to prevail as we roll forward,” Mock said on a conference call with reporters.

If that doesn’t happen and there’s higher taxation on trade in the form of tariffs, there could be an economic slowdown that would cause central banks to take actions such as lowering interest rates.