CAD Traders Underestimating Risk of Trump's 25% Tariff — Market Talk
2024-12-13
Category: economic

The Canadian dollar is either markedly oversold or undervalued based on current CAD trading amid President-elect Trump's pledge to impose a 25% tariff on imports from Canada, says forex research firm Spectra Markets. A 25% tariff on Canadian goods "would be so damaging that it's almost impossible to handicap where USDCAD might go," says Spectra president Brent Donnelly. He says CAD volumes suggest traders are ignoring the risk that Trump follows through on his 25% pledge. "It's certainly not a zero probability that these tariffs get announced," he tells clients. He adds investors should approach CAD trades assuming tariffs lower than 25% emerge on Day One of Trump's second term, with the threat of increases over time. (paul.vieira@wsj.com, @paulvieira)