Canada and the US discussing tariff relief deal

Canada and the U.S. are reportedly in advanced discussions on a tariff relief package that could ease pressure on the Canadian dollar. According to the report, Canada may remove retaliatory tariffs, restore U.S. alcohol products to shelves, and accept Washington’s view on dairy quota allocation in exchange for partial U.S. tariff relief on steel and aluminum. The deal would be interim rather than a full resolution, and talks also include aligning external tariffs on some Chinese goods. The market implication is mildly bullish for CAD/loonie because improved trade certainty could support the currency, especially with the August 19 tariff deadline approaching. USD/CAD has already fallen 70 pips to 1.3941, its lowest level since mid-June, reflecting optimism around a possible agreement and Canada’s resilient domestic economy after strong jobs data.