Tariff Shock Falls Flat: USD/CAD Barely Blinks at $20 Billion Tariffs

The US imposed additional 50% tariffs on around $20 billion of Canadian goods on August 22, but the USD/CAD exchange rate barely moved.

This is because the tariff risk was already known to the market since it was announced on July 20. The market had also seen a rally in CAD last week due to hopes that negotiations with the US would stop or soften the tariffs.

The collapse of talks on Friday led to a modest rebound in USD/CAD, but this is seen as a partial reversal of last week's deal optimism rather than a response to the new tariff shock.