U.S. stock indices started Tuesday’s trading session with declines. The US500 is already down nearly 0.85% after the White House announced changes in trade policy with Canada. Donald Trump has instructed the Secretary of Commerce to impose additional tariffs ranging from 25% to 50% on all steel and aluminum imported into the United States from Canada. These changes will take effect starting tomorrow. Furthermore, the U.S. president added that tariffs on cars imported into the U.S. will increase significantly from April 2 if other tariffs are not lowered by Canada.
The Canadian side has stated that the White House’s new decisions will not lead Canada to remove its existing tariffs on the U.S. The Ontario Premier said that his administrative unit, along with the entire country, will not back down until Trump's tariffs are completely lifted. This news pushed the USDCAD pair up by nearly 0.8%.
It is important to remember that the trade war between the U.S. and Canada is significantly more damaging to Canada. The U.S. is both a major importer of Canadian goods (72.5% of Canada’s exports go to the U.S.) and a major exporter (60.7% of Canada’s imports come from the U.S.). The same cannot be said in reverse. However, Canada remains among the most important trading partners of the U.S., alongside Mexico, the Eurozone, and China.
US500 (M15 Interval)
Stock indices attempted to rebound earlier in the day, but after the news of increased tariffs on Canadian products, the market returned to selling. The US500 initially gained 0.70%, but it is now down about 0.70%, testing the lower levels of yesterday’s declines around 5,570 points.
USDCAD (M15 Interval)
Even stronger movements are observed in the USDCAD currency pair. The volatility is understandable, as these are yet another step toward a trade war between the U.S. and Canada. The pair surged by as much as 0.80% following Trump’s announcement of additional tariffs.
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