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Canadian Dollar Takes New US Tariffs 'In Stride' With Limited Market Reaction, BMO Says

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The Canadian dollar has largely shrugged off the news of new U.S. tariffs and traded marginally stronger early on Tuesday after a brief dip, according to BMO Capital Markets.

The loonie traded at C$1.4069 recently, up slightly from the day earlier level of C$1.4071. The White House said late Monday that the U.S. will impose 50% tariffs on a broad range of Canadian goods, effective Aug. 19.

The duties target Canadian sectors including alcohol, dairy and autos.

"For markets, the loonie has taken the news in stride, slightly stronger since the announcement after a brief and mild dip," BMO Senior Economist Robert Kavcic said in the note. "Perhaps the market knows how this game is played now."

For the Bank of Canada, the latest trade development reinforces that uncertainty around the U.S. trade relationship remains elevated, following Monday's "well-contained" consumer price index data, Kavcic said.

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