US-Canada Trade War Escalates

Trade tensions between the United States and Canada have escalated significantly after Canada announced retaliatory tariffs of up to 50% on $20 billion worth of imports from the US. This move comes in response to former President Trump's proposed plans to increase duties on automobiles and auto parts imported from Canada. Although the countermeasures are framed as proportional and designed to strengthen Ottawa's negotiating leverage, they introduce substantial uncertainty for cross-border supply chains and heighten inflation risks. In currency markets, USD/CAD continued its upward drift as trade friction resurfaced. The escalation poses challenges for North American corporate planning and monetary policy expectations ahead of crucial US PCE inflation data. Meanwhile, global markets absorbed broader macroeconomic developments, including lower crude oil prices, which saw Brent slide toward $86 per barrel on easing geopolitical tensions in the Middle East, further influencing commodity-linked currency dynamics.