USD/CAD finds support above 1.4300 as Trump announces new tariffs on foreign cars

USD/CAD rebounded to around 1.4305 during the U.S. evening session on Wednesday. Expectations of U.S. auto tariffs and easing geopolitical tensions boosted the U.S. dollar against the Canadian dollar (CAD). Traders will be watching weekly U.S. jobless claims and the final report on fourth-quarter gross domestic product (GDP) later on Thursday.

Late Wednesday, U.S. President Donald Trump signed an order imposing a 25 percent tariff on imported cars, further widening the global trade war. Trump said the tariffs would take effect on April 2, with the U.S. beginning to collect them the next day. The development put pressure on the Canadian dollar and provided a tailwind for the pair as about 75% of Canada’s exports, including oil and automobiles, go to the United States.

Minutes from the Bank of Canada’s latest meeting noted that concerns that trade policy uncertainty was “significantly undermining” near-term economic growth prompted the central bank to cut its key interest rate this month, even as some policymakers saw a pause in rate hikes as appropriate.

Trump said in late November he would impose 25% tariffs on imports from Canada and Mexico but delayed their implementation in February and March. Those policies are now set to take effect on April 2, although the Toronto Star reported on Wednesday that Canada may be on the lower end of the tariffs. The unpredictability of the Trump administration could weaken the Canadian dollar in the short term.