Canada’s economic outlook has taken a hit as forecasts for the Canadian dollar were slashed due to the looming threat of U.S. trade tariffs. According to a recent Reuters poll, experts have downgraded their predictions for the loonie, with expectations for only slight gains over the next year. The Canadian dollar is expected to rise by just 0.3% over the next three months and 0.4% over the next year, reaching 1.4034 per U.S. dollar.
The downward revision comes in response to President-elect Donald Trump’s threats to impose a 25% tariff on imports from Canada and Mexico. This has raised concerns about the potential economic consequences for Canada, especially as trade relations with the U.S. are crucial for the country’s economy.
The Canadian dollar had already seen a nearly 5% decline since late September, driven by global economic pressures and the uncertainty surrounding U.S. trade policy under Trump. The tariff threat, along with concerns over the ongoing global trade tensions, has further dampened the currency’s outlook.
Canada’s central bank, which has already reduced interest rates significantly this year, is closely monitoring the situation. Analysts expect that if the tariff plans move forward, it could further complicate Canada’s economic recovery and fiscal stability.
As the situation develops, many are closely watching the U.S.-Canada trade relationship, as any major shifts in policy could have lasting effects on the Canadian economy and its currency in the coming months.
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