Canadian dollar rises to best levels since Feb 24 on signs the tariff war will pause

It looks like we will get an end to this chapter in the tariff war later today.

On CNBC, Commerce Secertary Howard Lutnick said it’s “likely” that tariffs will be removed on all USMCA compliant goods and services that cross the border. That covers pretty much everything that goes between Canada and the USA.

In response, we’ve seen an improvement in risk appetite and USD/CAD fall to 1.4265 in a quick 80 pip move. It’s the third day of selling in the pair after touching 1.4543 early on Monday. It’s the best level for the loonie since Feb 24.

I think the market is still struggling to understand the details here and what’s coming next. There is also some skepticism it will happen until it’s announced, as everything is subject to change under Trump.

Lutnick also offered a hint that this will be the end of it on the USMCA front, though that’s speculative. He said that April 2 is the big day around reciprocal tariffs. Of course, the USMCA is a free trade zone and there are very few tariffs between the US and Canada, so there isn’t much risk there.

He highlighted things like dairy and butter but the amount of trade in those things is negligible and if Trump tariffs those exports from Canada it’s almost meaningless, and certainly would be for markets.

So I expect this will be some lasting good news, though certainly not forever. Officials are scheduled to renegotiate the USMCA starting in July 2026 (and running through year end 2026) so any peace on the North American front will be temporary.

This article was written by Adam Button at www.forexlive.com.