Canadian dollar slides as US-Canada tariffs widen trade risks
The Canadian dollar weakened to 1.38 per USD from a three-month high of 1.376 on August 21st as Ottawa imposed 15%-50% retaliatory tariffs on $20 billion in US annual imports and the US escalates car and steel tariffs.
The Canadian dollar weakened to 1.38 per USD from the three-month high of 1.376 on August 21st as a greater deterioration to trade with the US hampered the outlook on growth.
Canada imposed retaliatory tariffs of 15%-50% on a $20 billion of US annual import flows, including metals, agricultural goods, and motorcycles.
This was Ottawa's response to the increase on US tariffs against Canada after trade talks between both economic partners collapsed.
US President Donald Trump said that tariffs on all Canadian cars, trucks, automotive parts and steel would rise to 50% on January 1st, 2027, in addition to new tariffs on multiple other goods sectors.
Risks to growth from higher tariffs drove markets to reduce expectations of a rate hike by the Bank of Canada this year, even though elevated energy prices threatened a pickup in inflationary risks.