Loonie’s plunge just one consequence of Trump tariff threat on your wallet

The loonie is shaping up arsenic an aboriginal casualty of U.S. president-elect Donald Trump’s latest commercialized threats against Canada, with knock-on impacts expected elsewhere successful Canadian pocketbooks.

The worth of the Canadian dollar dropped to a four-and-a-half-year debased of 70.53 cents to the U.S. greenback precocious Monday successful the aftermath of Trump issuing renewed threats via societal media for 25 per cent tariffs connected each imports from Canada and Mexico.

The loonie regained immoderate worth done the greeting connected Tuesday but was down 0.7 per cent implicit the past time and held beneath the 71-cent people by 10 a.m. eastern.

Despite a rally precocious past week, the Canadian dollar has mostly faltered against its American counterpart since the U.S. predetermination earlier this month.

Much of that weakness has been tied to promises Trump made during the run to levy broad tariffs against different nations and instal different protectionist, America-first policies — moves that promote investors to heap into the U.S. dollar, hurting different currencies.

The Canadian dollar is besides affected by the differential betwixt the argumentation rates of the Bank of Canada and the U.S. Federal Reserve, with a wider spread hurting the loonie. Signs that Canada’s cardinal slope whitethorn rein successful the gait of involvement complaint cuts helped to substance the loonie’s short-lived rally past week.

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A weaker Canadian dollar makes imports to the state much expensive, which risks reigniting ostentation that has cooled successful caller months.

The interaction of the sagging loonie is already being felt astatine the market store, BMO elder economist Sal Guatieri told Global News past week.

Canada is acceptable to import much caller nutrient from the U.S. arsenic the wintertime approaches, which Guatieri said means Canadians tin expect to wage much arsenic the looming Trump presidency keeps the loonie “on the defensive.”

—With files from Global News’ Anne Gaviola.