Trump’s tariff announcement today provides limited clarity about the longer-term impacts, but most economists predict they will drag on economic performance.
This can negatively affect the USD. Interestingly, Canada was the one country that has been the subject of extensive rhetoric but went unscathed today.
They weren’t on Trump’s chart either.
Warnings over the impact of Canadian tariffs may have scared Trump from an aggressive policy.
They will be subject to the “across the board” 10% tariff announced today, but since nothing additional was announced, I’m inclined to believe someone explained to Trump that going after Canada would create many complications for Americans.
Mexico wasn’t on the list, either.
Where does this leave USDCAD?
Their absence is a plus for the Loonie but a drag on the USD.
USDCAD has rallied since September 2024, including a “blow-off” rally at the beginning of February.
Since then, the price has been consolidating around 1.4400, which could catalyze the reversal.
A close below 1.4100 will confirm the reversal and could send the pair back to the rally’s start at 1.3500 or lower.
Even if the Bank of Canada reduces rates in response to low inflation, it won’t prop up the USD in this situation.
On an unrelated note, Russia wasn’t listed, either. Read into that as you see fit.
