Trump’s Tariffs Hit Canadian Dollar and Mexican Peso Amid Trade War Concerns

The Canadian dollar and Mexican peso remain under pressure as U.S. President Donald Trump confirmed that 25% tariffs on imports from Canada and Mexico will take effect. The loonie stood at $1.4496, nearing a one-month low, while the peso dipped 0.2% to 20.7390 per dollar, its weakest since early February.

Trump justified the tariffs by citing fentanyl flows into the U.S., dismissing the possibility of a last-minute trade deal. The new tariffs, affecting over $900 billion in annual imports, could disrupt the North American economy, with corporate leaders and economists warning of inflationary effects. Analysts expect further trade restrictions on Europe and beyond, compounding global economic risks.

RBC’s Andrzej Skiba predicts the tariffs will limit the Federal Reserve’s ability to cut interest rates, increasing volatility in fixed-income assets. The U.S. dollar index remained at 106.49 after a recent drop, with concerns rising over weakening consumer spending and potential economic slowdowns.

Meanwhile, the euro held firm at $1.0482 following a sharp rebound, as traders watch for developments in Ukraine and the European Central Bank’s policy decision. The ECB is expected to implement another 25 basis point rate cut amid persistent inflation concerns.

Sterling hovered at $1.26995, while the yen strengthened to 148.75 per dollar. Trump also criticized Japan and China for currency devaluation, adding uncertainty to global markets. The Australian dollar slipped 0.19% to $0.6213, and the New Zealand dollar fell 0.12% to $0.5610.

As markets brace for further trade tensions, investors remain cautious about the broader economic implications of Trump's aggressive tariff policies.