USD/CAD holds up OK despite tariffs

OK, so it's finally happened. On March 4, 2025, President Trump imposed a 25% tariff on imports from Canada and Mexico, with Canadian energy products facing a separate 10% tariff. Tariffs on Chinese imports were also doubled from 10% to 20%.

In response, Canada imposed immediate 25% tariffs on CA$30 billion worth of U.S. goods, with plans to extend them to another CA$125 billion in the coming weeks. While USD/CAD maintained a steady upward movement, it is difficult to characterize the move as a broad-based selloff. Maybe this is more of a trade scuffle than a trade war right now?

China announced additional tariffs of 10% to 15% on U.S. agricultural products, effective March 10. Mexico is set to announce its own retaliatory tariffs on March 9.

Now, the focus shifts to Trump’s next move. He has already suggested he will reciprocate the reciprocation. Where does this end? Full blown trade war? Meanwhile, reports suggest he is considering easing sanctions on Russia.