July 14, 2025 — The U.S. dollar traded higher against the Canadian dollar on Monday, with USD/CAD hovering near 1.3690 during the Asian session, as renewed tariff threats from Washington added pressure to the loonie ahead of key inflation data.
The Canadian dollar weakened in early trading after former U.S. President Donald Trump proposed new tariffs on major trading partners, including the European Union and Mexico. The proposed 30% import tariffs, set to take effect on August 1, follow last week’s announcement of a 35% tariff on Canadian imports, adding to existing 50% tariffs on Canadian steel and aluminum. The trade measures are fueling fresh concerns about Canada’s export-driven economy and putting downward pressure on its currency.
Canada’s position as the largest U.S. supplier of both steel and aluminum leaves it particularly vulnerable to the latest wave of protectionist policies. Analysts suggest these developments could further strain the Canadian dollar in the near term.
Despite trade tensions, stronger-than-expected labor market data from Canada last week may help cushion the blow. Statistics Canada reported Friday that the unemployment rate dipped to 6.9% in June, beating forecasts of 7.1% and improving from May’s 7.0%. In addition, the Canadian economy added 83,100 jobs in June—far surpassing the modest 8,800 increase seen in May and defying expectations for flat growth.
The upbeat employment figures have prompted analysts to dial back expectations of a July interest rate cut by the Bank of Canada (BoC). Markets are currently pricing in only a 13% chance of a 25 basis point cut at the central bank’s next policy meeting, according to LSEG Data & Analysis.
Investors now await Canada’s June Consumer Price Index (CPI) data, due on Tuesday, for further insight into the central bank’s potential policy path.
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