They fell to a minimum of 10 weeks after President Trump announced a tariff of 35% of Canadian exports. The increase of 1,3876 Canadian dollars in the news, since merchants quickly repeated risks to Canada's economy. The commercial sanction, developed after Ottawa failed to reach a new agreement with Washington, only marks a significant escalation in the commercial tensions of the United States.
USD/3 months
Canada is now the atypical
While Canada faces rates, Mexico received another delay, underlining the growing isolation of Ottawa in the commercial structure of North America. This asymmetry has created a unique risk premium around the Loonie, particularly in the eyes of institutional investors.
Ing Francesco Pesole's strategist wrote: “Markets continue to underestimate the downward risks for the Canadian economy.” The strong divergence between Mexico and Canada in exposure to tariff adds a geopolitical front wind to the already fragile perspective of Canada.
Rate state – Canada vs. Mexico
|
Country |
Fee |
Treatment status |
Market reaction |
|
Canada |
35% |
No agreement |
CLRLS CORN |
|
Mexico |
0% (pause) |
Extended treatment |
Stable weight |
The dilemma of the Bank of Canada deepens
The tariff shock adds pressure on the Bank of Canada, which already faced warm growth, cooling and softening. The Central Bank can now be forced to reduce rates before expected to protect the economy from a deeper slowdown.
Comparison of policy rates – Boc vs. Fed
A slide to USD/CAD 1.40?
The USD/CAD torque could reach 1.40 in the short term if economic data deteriorates or expectations intensify. With little resistance between current levels and that psychological barrier, the impulse seems to favor the weakness of Loonie.
USD/CAD forecast route – next 30 days
Structural risks under the surface
This is not just a tariff story, it is structural. Canada depends largely on US demand, with almost 75% of exports to the south of the border. Add consumer debt concerns, a stretched real estate market and mediocre growth of productivity, and you have a poorly prepared economy for external clashes.
The confidence in the export of Canada by destination
Conclusion: Tarifa pain is just the beginning
The Loonie slide is only the reaction at the surface level. The real danger lies in the compound effects: weakening exports, cuts of potential rates and the trust of agitated investors. With the US dollar, recovering the domain and geopolitical clarity that is missing, the path of CAD ahead could become even harder. Unless Ottawa finds a diplomatic ramp or Boc is rapidly stressed, the 1.40 mark may not be a limit, it could be a midpoint.
