FX.co ★ Canadian Dollar Falls on US-Canada Trade War

The Canadian dollar weakened to about 1.38 per US dollar, retreating from a three‑month high of 1.376 reached on August 21st, as the US‑Canada trade war escalated following the breakdown of negotiations. US President Donald Trump announced that tariffs on all Canadian cars, trucks, auto parts, and steel would be raised to 50% as of January 1, 2027. The move came after Prime Minister Mark Carney pledged to retaliate against the initial round of US tariffs imposed after trade talks collapsed. Washington levied 50% duties on Canadian furniture, plastics, plywood, and electrical equipment, on top of existing 25% tariffs on steel, lumber, and automobiles. The increased tariff burden heightened downside risks to Canada’s growth outlook, weakening the case for an interest rate hike by the Bank of Canada this year, even as elevated energy prices continued to pose upside risks to inflation.