Trump Tariffs Send Canadian Dollar into Free Fall
A recent announcement by US President Donald Trump has sent shockwaves through the market, causing the Canadian dollar to depreciate against the US dollar. On August 24, 2026, Trump announced that Washington would raise tariffs on imports of cars, trucks, and automotive parts from Canada to 50%, effective January 1, 2027. This move follows a decision by the US to impose 50% tariffs on approximately $20 billion worth of Canadian goods after bilateral trade negotiations broke down.
Canadian Prime Minister Mark Carney responded by stating that Ottawa would impose retaliatory tariffs on US goods on a 'dollar-for-dollar' basis, as reported by Reuters. However, despite the escalating tensions, it's worth noting that these actions do not signify the termination of USMCA treatment. The tariff announcements do not eliminate preferential tariff treatment for products covered under the trade agreement.
From a technical perspective, the USD/CAD pair has been following a downward trajectory over recent weeks but is currently recovering its 200-day simple moving average (SMA). This could be interpreted as an underlying bullish bias. The price action has paused at the current level of 1.3842, and short-term momentum oscillators indicate a potential inflection point or consolidation phase within the current price action structure.
The next major technical ceiling for the USD/CAD pair is identified at 1.3950, with a decisive breakout above this zone potentially signaling an extended rally into higher price territories. However, if the 1.3850 level is invalidated to the downside, the next relevant support floors rest at 1.3745 and 1.3560.