Loonie Slumps as Canada Imposes Tariffs in Ongoing Trade War

Canada's latest trade war move has put the Canadian dollar under pressure and raised concerns about supply chain disruptions. The country imposed tariffs worth $27.6 billion on over 700 US products, which went into effect on Tuesday. This development has caused the loonie to hit its weakest level since August 19, with USD/CAD rising 0.27% to 1.3876.

The move is part of a broader trade war between Canada and the US, with both countries targeting more products and higher tariff rates. Analysts are watching the September 8 tariff start date for further commodity volatility and a potential second leg down in the loonie.

Canada's Ivey PMI jumped to 64.3, but employment fell by 41.7K jobs and unemployment stayed at 6.4%. US inflation remains sticky, with core PCE at 3.3%, keeping the Fed hawkish and amplifying currency and commodity swings.