The outlook for a last-minute US-Canada trade agreement is getting a bit bleaker, with US officials reportedly downplaying hopes of a deal ahead of Tuesday’s tariff deadline. US President Trump and Canadian PM Carney are nevertheless expected to speak again ahead of the midnight deadline.
The latest development follows Monday’s direct call between Trump and Carney. While Canadian officials have described negotiations as intense and delicate, the White House has reportedly indicated that no breakthrough has yet been reached that would justify delaying the planned tariffs.
As a reminder, the US is scheduled to impose 50% tariffs on around $20 billion of Canadian imports at 12:01 a.m. Wednesday, making the coming hours critical for Canada, the loonie and the Bank of Canada.
The Trump-Carney conversation keeps the possibility of a last-minute agreement alive, but the more cautious tone from Washington suggests that markets should be ready for US tariffs to go into effect, although it wouldn’t be the first time that Trump postpones or signs a deal at the last minute. The Canadian dollar will remain highly sensitive to any headlines from the negotiations.
If there’s a breakthrough or the tariffs get delayed, expect the Canadian dollar to rally in the short-term. If the negotiations fail, on the other hand, the loonie will likely extend the losses against the US dollar in the coming days, unless a surprising US-Iran deal weighs on the greenback.
This article was written by Giuseppe Dellamotta at investinglive.com.