USD/CAD: US New Tariffs; It’s ‘Officially A Trend’; CAD Negative – CIBC

March 7, 2018

President Donald Trump slapped tariffs on aluminum and steel, in a move that sent shockwaves all over the world. For Canada, a steel exporter to the US, it has a significant adverse effect.

 

Here is their view, courtesy of eFXnews:

 

CIBC Research discusses its reaction to the new US tariffs announced today on of 25% on steel and 10% on aluminum. 

 

“It’s officially a trend. After slapping duties on Canadian softwood lumber, paper and pipes, the Trump administration is taking its protectionist agenda a step further. Earlier today, President Trump announced his intention to impose broad-based tariffs of 25% on steel and 10% on aluminum.

 

If implemented, it could represent a stiff blow to Canadian industry. The country is the largest supplier of both commodities to the US, and at least for now, there was no mention of any exemption for Canada,” CIBC argues.

 

“The direct impact of these tariffs would be inflationary for the US and, by opening up some economic slack, deflationary for Canada. If these plans move forward with Canada explicitly included, expect some further depreciation of the Canadian dollar, which would add back some inflation pressure.

 

But given the negative impacts on economic growth, the Bank of Canada is likely to tolerate the inflation coming from C$ weakness, so overall, a tariff war leans towards a more patient central bank in terms of additional rate hikes,” CIBC concludes.

 

 

Reposted from Forex Crunch (USD/CAD: US New Tariffs; It’s ‘Officially A Trend’; CAD Negative – CIBC. Yohay Elam. March 7 2018)

 

 

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