- The USD/CA has been hit hard by the growing tariff war between the US and China.
- China imposes additional 34% on import tariffs on US products.
- The courses of 25% of Canada on US cars have entered into force on April 9.
The USD/CAD torque falls hard to about 1,4180 during European negotiation hours on Wednesday. The Loonie’s pair faces an intense mass sale while the US dollar (USD) assumes the blame for the increase in the import tariff of China to 104% by the US president (US), Donald Trump. The US dollar index (DXY), which measures the value of the dollar against six main currencies, collapses about 102.00.
On Tuesday, US President Trump increased reciprocal tariffs over China to 84%, after the retaliation of Beijing. Last week, China imposed a 34% tariff on US imports as retaliation against Trump’s reciprocal tariffs. Trump has also blamed China for manipulating its currency to compensate for the impact of higher tariffs.
During European negotiation hours, China has imposed additional tariffs of 84% on the US, which will enter into force on April 10.
Financial market participants prepare for a significant increase in inflation and a deceleration in US economic growth due to the current commercial war between the US and China. This could lead to a strong decrease in US business activity, given the significant dependence on US importers of profitable products in China.
The fears of an economic slowdown in the US have led operators to increase bets in favor of the Federal Reserve (Fed) cutting interest rates at the May meeting. The CME Fedwatch tool shows that the probability that the Central Bank cuts interest rates in May has increased to 52.5% from 10.6% registered a week ago.
Meanwhile, the Canadian dollar (CAD) is expected to remain volatile, since 25% countertops announced by the Canadian government last week have entered into force since April 9. A Canadian ministry spokesman said Tuesday that these countermeasures will remain in force “until the US eliminates their tariffs against the Canadian automotive sector.”
FAQS tariffs
Although tariffs and taxes generate government income to finance public goods and services, they have several distinctions. Tariffs are paid in advance in the entrance port, while taxes are paid at the time of purchase. Taxes are imposed on individual taxpayers and companies, while tariffs are paid by importers.
There are two schools of thought among economists regarding the use of tariffs. While some argue that tariffs are necessary to protect national industries and address commercial imbalances, others see them as a harmful tool that could potentially increase long -term prices and bring to a harmful commercial war by promoting reciprocal tariffs.
During the election campaign for the presidential elections of November 2024, Donald Trump made it clear that he intends to use tariffs to support the US economy. In 2024, Mexico, China and Canada represented 42% of the total US imports in this period, Mexico stood out as the main exporter with 466.6 billion dollars, according to the US Census Office, therefore, Trump wants to focus on these three nations by imposing tariffs. It also plans to use the income generated through tariffs to reduce personal income taxes.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
