US Officials Downplay Hopes for Last-Minute Trade Deal with Canada

The fate of the US-Canada trade agreement remains uncertain as US officials downplay hopes for a deal ahead of Tuesday's tariff deadline. According to reports, no breakthrough has yet been reached that would justify delaying the planned tariffs. The US is scheduled to impose 50% tariffs on around $20 billion of Canadian imports at 12:01 a.m. Wednesday.

Despite a direct call between US President Trump and Canadian PM Carney on Monday, negotiations are said to be intense and delicate. While the White House has indicated that no deal has been reached, the possibility of a last-minute agreement remains alive. The Canadian dollar will remain highly sensitive to any headlines from the negotiations.

Markets should be prepared for US tariffs to go into effect, although it's not unprecedented for Trump to postpone or sign a deal at the last minute. If there is a breakthrough or the tariffs get delayed, expect the Canadian dollar to rally in the short-term. If the negotiations fail, the loonie will likely extend its losses against the US dollar.

The coming hours are critical for Canada, the loonie, and the Bank of Canada as the tariff deadline approaches. A surprising US-Iran deal could weigh on the greenback and affect the Canadian dollar's performance.