Canadian Dollar Takes Hit from US-Canada Trade Negotiations Breakdown

The breakdown in U.S.-Canada trade negotiations had a significant impact on the Canadian dollar and interest rates. President Trump gave Canada a three-day grace period before imposing a threatened 50% tariff on $20 billion of Canadian goods.

The Canadian dollar is sensitive to changes in the two-year interest-rate differential, making it vulnerable to fluctuations in U.S.-Canada trade talks. A trade war with an economy roughly 12 times larger is a significant threat to Canada's economic stability.