FX.co ★ Canadian Dollar Pressured by US Tariffs

The Canadian dollar experienced a decline, nearing 1.37 against the US dollar following President Trump's announcement of a 35% tariff on all Canadian goods outside of the USMCA agreement, effective August 1st. This announcement has intensified apprehensions regarding Canada's export routes and heightened uncertainty around trade policy. By citing Ottawa’s retaliatory tariffs and what he described as a lack of "cooperative spirit," Trump's move exerts additional pressure on Canada to finalize a new agreement by the deadline. This comes on top of the existing 50% tariffs on Canadian steel and aluminum, where Canada remains a major supplier to the United States. In contrast, Canada’s domestic economy presented a favorable development: June's labor report far exceeded expectations, showing the creation of 83,100 jobs and a reduction in the unemployment rate to 6.9%. This positive economic data has tempered market expectations for a potential rate cut by the Bank of Canada at its July 30th meeting and continues to lend underlying support to the Canadian dollar, despite the ongoing trade tensions.