Trump’s Tariffs Push USD/CAD to a 22-Year High

As promised during his election campaign, US President Donald Trump introduced tariffs just two weeks after his inauguration:
→ 25% on goods from Canada and Mexico, prompting both countries to vow retaliatory measures.
→ 10% on Chinese goods, with China announcing plans to challenge the decision at the World Trade Organization.

The tariffs will take effect on 4 February. Trump acknowledged potential economic pain but justified the measures as necessary to combat illegal immigration and drug trafficking, arguing that the long-term benefits would outweigh the costs.

Trump’s decision:
→ Led to a decline in US stock indices, as analysts fear a potential trade war and global stagflation (sluggish economic growth amid high inflation). Further tariffs on Europe may follow.
→ Strengthened the US dollar, which gained around 1% against major currencies.

According to the USD/CAD chart, the Canadian dollar is trading around 1.4700 against the US dollar—a level last seen in early 2003.

On 30 January, our USD/CAD technical analysis highlighted the significance of a key trendline supporting the uptrend since last autumn. Now, by drawing a parallel line through December’s peak (A), we can identify a resistance level where the pair is currently stabilising.

A large bullish gap has also formed on the chart. The lower boundary around 1.4600 may act as technical support in the short term, though broader price movements will likely be driven by fundamental factors.

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