Title: USD/CAD Weekly Outlook: Trump’s Tariff Threats Stir Up Trade Tensions Again
Original article by Kenny Fisher – Forex Crunch
Updated and expanded for broader context and analysis.
Overview
The USD/CAD currency pair saw modest movement last week amid renewed global unease sparked by former President Donald Trump’s fresh rhetoric on trade policy. The pair traded in a relatively narrow range, closing near the 1.3600 handle, as traders weighed growing inflation concerns, Federal Reserve policy direction, and geopolitical uncertainties. However, the key driver of volatility remains the threat of import tariffs highlighted by Trump’s campaign, rekindling memories of his first-term trade battles, especially with China and North America.
This week ahead is poised to deliver renewed action on the USD/CAD front, with major U.S. and Canadian data releases scheduled. Moreover, with oil prices rising and employment readings from both sides of the border on tap, forex traders will face a confluence of factors driving volatility in the pair.
Key Highlights from the Past Week:
– USD/CAD traded between 1.3570 and 1.3650 over the week.
– Trump reiterated his intent to reimpose tariffs on imported Chinese goods and potentially expand this to other markets.
– The Canadian labor market impressed with solid job growth, while U.S. economic data offered mixed signals.
– Oil prices continued to trend upward, offering some support to the loonie (CAD), as Canada is a major oil exporter.
Let’s take a deeper look into what shaped USD/CAD’s movement and what traders should expect this week.
Tariff Talk: Trump Sparks Trade Tensions Again
Former President Donald Trump re-emerged on the global economic radar with aggressive rhetoric promising more tariffs if re-elected in 2024. In a recent rally and multiple media interactions, he proposed:
– A 10% universal tariff on all foreign imports.
– A possible 60% tariff on Chinese-made goods.
– Renegotiation of existing trade deals deemed “unfair.”
– Potential withdrawal from World Trade Organization proceedings if they “undermine American sovereignty.”
These remarks immediately sparked fears of a return to protectionist trade policies and retaliatory measures—a dynamic that, during Trump’s presidency between 2017–2021, led to global market instability and disrupted supply chains.
Implications for USD/CAD:
– The Canadian dollar, historically sensitive to U.S. trade policy due to tight bilateral economic ties, reacted cautiously to these developments.
– Uncertainty over future trade flows and the USMCA (United States-Mexico-Canada Agreement) makes CAD vulnerable.
– Traders remember the volatility of the NAFTA renegotiations and steel/aluminum tariff disputes under Trump’s administration.
Historical Context – Lessons from 2018-2020
During Trump’s first term, his America-First trade policies had a significant effect on currencies and markets:
– In 2018, threats to NAFTA and the imposition of 25% tariffs on steel and 10% on aluminum led to a drop in the Canadian dollar.
– Despite eventual agreement on the USMCA, investor uncertainty stayed elevated well into 2019.
– USD/CAD jumped significantly on days when rhetoric intensified, providing valuable lessons on headline-driven forex volatility.
Current Market Reaction: Why USD/CAD Is Holding Steady (for Now)
Despite the sharp rhetoric, USD/CAD hasn’t reacted dramatically. Several factors are helping offset the bearish impact on the Canadian dollar:
1. Crude Oil Prices:
– WTI crude topped $83 per barrel recently, supported by OPEC+ output cuts and Middle East tensions.
– Canada’s economy benefits from high oil prices, as crude is its top export.
– A supportive energy market acts as a buffer for CAD during geopolitical shocks.
2. Canadian Labor Market:
– Canada added over 60,000 jobs in June 2025, beating expectations.
– The unemployment rate held steady at
Read more on USD/CAD trading.