USD/CAD Edges Lower as Canada Races to Close Trade Deal Before August 19 Tariff Deadline
Key Takeaways
- •Canada and the United States intensified trade talks ahead of an August 19 tariff deadline.
- •Dominic LeBlanc met Jamieson Greer in Washington for their third in-person meeting.
- •Canada is seeking to avoid 50% tariffs on hundreds of exports and wants lower duties on steel, aluminum, lumber and autos.
- •The negotiations may affect the future of the USMCA ahead of its scheduled 2026 review.
- •USD/CAD came under selling pressure, and a trade deal could help the Canadian dollar if an agreement is reached.
The U.S. dollar extended its decline against the Canadian dollar on Monday as top negotiators from both countries intensified talks aimed at reaching a trade agreement before an August 19 tariff deadline.
According to CBC, Canada–U.S. Trade Minister Dominic LeBlanc and his American counterpart "are aiming to present U.S. President Donald Trump a path to a potential trade deal as early as Monday," citing unnamed sources familiar with the discussions.
LeBlanc is meeting today with U.S. Trade Representative Jamieson Greer in Washington. It marks the third face-to-face meeting between the two officials as the deadline looms.
On August 19, 50% tariffs are scheduled to take effect on hundreds of Canadian imports, with the United States set to impose similar levies on other trading partners as well. Avoiding those tariffs serves as the baseline for any prospective agreement. The stakes are particularly high for Canada, which sends roughly three-quarters of its exports south of the border, making the U.S. by far its largest trading partner.
Beyond tariff avoidance, Canada is seeking reduced duties on steel, aluminum, lumber, and autos. Notably, this latest report from CBC includes lumber in the negotiation list, whereas previous accounts had omitted it. Additional reports suggest Canada may pursue a combination of lower tariff rates and quotas specifically on steel and aluminum. The current 50% tariff level has severely impacted the Canadian steel industry in particular.
The broader negotiations also carry implications for the United States–Mexico–Canada Agreement (USMCA), the trilateral trade pact that replaced NAFTA and governs most North American trade relations. The USMCA is itself approaching a scheduled joint review in 2026, meaning any bilateral side deals or precedents set in the coming days could shape that wider renegotiation.
In currency markets, USD/CAD has seen steady selling pressure following a significant rally in May and June, with the pair now approaching the 50% Fibonacci retracement level of that move. A substantive trade deal that provides clarity on both the bilateral tariff situation and the future of the USMCA framework would likely serve as a meaningful tailwind for the Canadian dollar, though achieving such an outcome within the current U.S. administration's negotiating style remains challenging.
