Lumber Tariff weakens the Canadian Dollar
The Canadian dollar has lost ground against Sterling following Trump’s decision to impose tariffs on lumber exports from Canada. The dairy trade dispute has escalated. There is a new Canadian milk policy which US producers are unhappy with stating it violates the North Atlantic Free Trade Agreement (NAFTA). The US have responded by putting in place anti-subsidy tariffs of nearly 20% on lumber imports. Lumber has been a matter of contention between the the two since the 80s. Canada responded stating the tariff is unfair and have indicated at litigation although they would rather come to some sort of agreement. The tariff is bad news for this sector as other areas maybe targeted. The US department of commerce has looked at companies in other sectors that it views are state subsidised giving them what could be considered to be a unfair advantage.
The tariff is not good news for the Canadian dollar due to it’s reliance on raw material exports. If the matter escalates further there could be further tariffs imposed which could cause further Canadian Dollar weakness.
Data Releases of Consequence
Keep an eye on UK GDP released on Friday, I expect there to be a slight contraction although I do not expect this to hit the pound too hard. Canadian GDP is also released on Friday and I would also expect to see a fall to add to Canadian Dollar woes. Things are currently looking good for Canadian Dollar buyers.
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