Loonie Surges as Canada Hits Back with Retaliatory Tariffs

The Canadian dollar strengthened against its US counterpart on Tuesday as Canada announced retaliatory tariffs in response to the ongoing trade war between the two nations.

According to Reuters, the loonie was trading at 1.3835 per U.S. dollar, or 74.21 U.S. cents, up 0.1% from Monday's decline due to the failure of a trade deal that would have avoided a 50% tariff on some Canadian goods.

Canada has imposed retaliatory tariffs on US annual imports worth about $20 billion and rolled out aid for businesses and workers, matching Washington's latest duties dollar-for-dollar.

Royce Mendes, head of macro strategy at Desjardins, stated that 'the escalation in the trade war will be difficult for the Bank of Canada to navigate' due to its impact on economic growth and monetary policy.