US and Canada trade deal could happen before G7 Summit next week
Citing new US Ambassador to Canada Pete Hoekstra, The Toronto Sun reported that a trade deal between the US and Canada could strike any time next week.
Hoekstra noted: "I am optimistic about where this relationship is and I’m more optimistic about where I believe this relationship is going".
Meanwhile, several Canadian sources said that the trade deal could happen before the G7 Summit on June 15.
One source commented that "it will happen before the G7, perhaps as early as next week.”
"Ottawa knows what they need to do" following Hoekstra's talk, another source said.
Market reaction
USD/CAD tracks the US Dollar (USD) rebound, trading modestly flat on the day near 1.3720, as of writing.
Tariffs FAQs
Tariffs are customs duties levied on certain merchandise imports or a category of products. Tariffs are designed to help local producers and manufacturers be more competitive in the market by providing a price advantage over similar goods that can be imported. Tariffs are widely used as tools of protectionism, along with trade barriers and import quotas.
Although tariffs and taxes both generate government revenue to fund public goods and services, they have several distinctions. Tariffs are prepaid at the port of entry, while taxes are paid at the time of purchase. Taxes are imposed on individual taxpayers and businesses, while tariffs are paid by importers.
There are two schools of thought among economists regarding the usage of tariffs. While some argue that tariffs are necessary to protect domestic industries and address trade imbalances, others see them as a harmful tool that could potentially drive prices higher over the long term and lead to a damaging trade war by encouraging tit-for-tat tariffs.
During the run-up to the presidential election in November 2024, Donald Trump made it clear that he intends to use tariffs to support the US economy and American producers. In 2024, Mexico, China and Canada accounted for 42% of total US imports. In this period, Mexico stood out as the top exporter with $466.6 billion, according to the US Census Bureau. Hence, Trump wants to focus on these three nations when imposing tariffs. He also plans to use the revenue generated through tariffs to lower personal income taxes.
Author
Dhwani Mehta
FXStreet
Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.
