Canadian Dollar Falls on US-Canada Trade War

2026-08-24 14:24 By Isabela Couto 1 min. read

The Canadian dollar fell to around 1.38 per US dollar from a three-month high of 1.376 on August 21st as the US-Canada trade war intensified following the collapse of negotiations.

US President Donald Trump said that tariffs on all Canadian cars, trucks, automotive parts and steel would rise to 50% on January 1, 2027.

This was after Prime Minister Mark Carney vowed to retaliate the initial series of tariffs by the US that were imposed after trade talks fell through.

Washington imposed 50% tariffs on furniture, plastics, plywood and electrical equipment, adding to existing 25% tariffs on steel, lumber and autos.

Risks to growth from higher tariffs reduced the argument for a rate hike by the Bank of Canada this year, even though elevated energy prices threatened a pickup in inflationary risks.



News Stream
Canadian Dollar Weakens After Fed Hike
The Canadian dollar weakened to near 1.40 per USD in mid-September, its lowest level in more than a month after the US Federal Reserve raised interest rates as expected. The Fed raised the target range for the federal funds rate by 25 bps to 3.75%-4%, reinforcing the US dollar’s advantage over the loonie. Updated Fed projections showed that most policymakers expect another hike before the end of 2026, widening the interest-rate differential between the US and Canada. The Bank of Canada kept its key policy rate unchanged at 2.25% at its September meeting, as widely expected. However, it noted that inflation risks had increased, while new tariffs had made the growth outlook more uncertain. The BoC left the future path of monetary policy open, saying it would adjust policy as needed. Governor Macklem said policymakers were prepared to raise rates if inflation remained elevated.
2026-09-16
Canadian Dollar Hits 4-week Low
The Canadian Dollar touched 1.39 against the USD, the lowest since August 2026. Over the past 4 weeks, US Dollar Canadian Dollar gained 0.48%, and in the last 12 months, it increased 1.23%.
2026-09-16
Canadian Dollar Hits One-Month Low
The Canadian dollar weakened to around 1.39 per USD in mid-September, a one-month low, after a relatively tame inflation report. The headline CPI rose 3.0% year-on-year in August, unchanged from July and matching market expectations. The Bank of Canada’s preferred median and trimmed-mean measures remained contained at 2.0% and 1.9%, respectively, refraining from accelerating despite soaring energy costs. Meanwhile, escalating conflict in the Middle East continued to raise wholesale oil and fuel prices. Higher oil prices typically support the Canadian dollar, as Canada is a major crude exporter, but the latest surge is also reviving inflation concerns and strengthening the case for tighter US monetary policy. The Fed is expected to raise interest rates on September 16th, supporting the US dollar.
2026-09-14