|

Canadian Dollar: Tariff shock weighs as Trump raises duties – BNY

BNY’s Geoff Yu explains that new 50% U.S. tariffs on selected Canadian goods are a direct trade shock, with Washington citing unfair treatment of US exports and ruling out United States-Mexico-Canada Agreement (USMCA) exemptions. Canada is trying to defend market access and limit domestic damage, but the announcement has added strain to trade talks and pressured the Canadian Dollar (CAD).

Trade tensions pressure CAD outlook

"Canada shows the difference between protecting an economy and raising trade barriers. Washington’s additional 50% duties on certain Canadian goods are a direct trade shock, while Canada is trying to preserve market access and limit domestic damage. Mark Carney’s signal that talks could intensify matters because Ottawa is defending its most important export relationship."

"For asset allocators, pricing tariff risk is becoming the new normal in Canada, not just a short-term political threat."

"The Trump administration said it will impose a fresh 50% tariff on select Canadian goods, escalating U.S.–Canada trade tensions. The levies, due to take effect in 30 days, target milk and cream, hockey equipment and alcohol, while excluding major resource imports such as energy, potash, fish and critical minerals, as well as goods already covered by separate auto and steel duties."

"The move was justified under Section 338 of the 1930 Tariff Act and tied to what Washington called unfair Canadian treatment of U.S. alcohol, cars and dairy. U.S. officials said there will be no USMCA exemptions. Canada said it had seen similar threats before."

"The announcement adds strain to already fragile trade talks after the U.S. declined to renew USMCA, with the Canadian dollar slipping on the news."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

Author

FXStreet Insights Team

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

More from FXStreet Insights Team
Share:

Editor's Picks

AUD/USD holds steady near 0.7200 amid escalating US-Iran tensions

AUD/USD consolidates just below its highest level since mid-May, touched on Friday, and hovers around 0.7200 at the start of a new week amid mixed cues. Hawkish RBA expectations continue to act as a tailwind for the Aussie. Meanwhile, the upbeat US NFP report lifted Fed rate hike bets, which, along with escalating US-Iran tensions, underpins the safe-haven US Dollar and caps the currency pair.

USD/JPY collapses to seven-month lows near 154.00

USD/JPY extends its decline on Monday, sliding to the area of seven-month lows near the 154.00 neighbourhood, all amid an increasingly hawkish repricing of the BoJ’s policy outlook and repatriation chatter.

Gold bounces off lows, back above $4,400

Gold builds on Friday’s losses, although it manages to regain some composure and reclaim the $4,400 mark per troy ounce on Monday. The yellow metal’s decline follows the move lower in the Greenback and steady caution ahead of key US data releases toward the end of the week.

Bittensor: TAO eyes $300 amid launch on Raydium, parody meme coin, ChatGPT-6 Astra release

Bittensor is trading in the green on Monday, continuing a steady upward trend over the last five days, with a 25% gain. Social chatter surrounding Bittensor is increasing amid a similarly named meme coin launched on Solana and the release of ChatGPT-6 Astra. The technical outlook for TAO is bullish as momentum strengthens and buyers target the $300 breakout.

Strong US jobs, Middle East tensions and key inflation data ahead
Good morning all, hope you enjoyed your weekend. Markets are starting the week after Friday’s stronger-than-expected US jobs report, which increased expectations that the Fed could raise rates at its September meeting. However, US markets are closed today for the Labor Day holiday, so liquidity should be lower and we may see slower price action.
Diesel’s record $100 warning: The oil shock hiding in plain sight

The Oil market may look calmer than it did a few months ago, but diesel is sending a very different message. The US diesel crack spread, the premium of ultra-low sulphur diesel futures over WTI, recently surged above $100 per barrel for the first time, reaching an intraday record of just over $102.00.