EUR, CAD flows: Trump tariff talk lifts CAD, hits EUR
The CAD has bounced and the EUR has slipped with Trump delaying tariffs on Canada and Mexico to April 2 but also stating tariffs on the EU will be 25% on autos and unspecified other things. While Trump’s repeated delays regarding Canada and Mexico are losing him credibility he is still talking positively about tariffs, and uncertainty now looks set to persist through March.
Trump promised tariffs on Canada and Mexico on day one of his presidency, and then promised them at the start of February, only to delay them until early March in return for some concessions at the border. Trump is moving away from focusing his trade war on Canada and Mexico to a broader one, with the EU increasingly becoming a target for his anger with differences on Ukraine probably playing a part. Canada and Mexico are not yet safe with Trump stressing autos in his comments regarding the EU, and Canada and Mexico would be particularly vulnerable to any broad auto tariffs. Trump is contesting a WSJ editorial which sees such tariffs as likely to be bad for Michigan, though Trump would be wise to listen to the warning, and is likely to be getting similar warnings from elsewhere.