Canadian Dollar Faces a Brutal Beatdown as Trade War Looms
The Canadian dollar could be on a collision course with its all-time low, warns a chorus of analysts, as U.S. President Donald Trump’s 25% tariffs on Canadian imports—set to kick in March 4, 2025—cast a dark shadow over the loonie. Already down 8% against the U.S. dollar in 2024 and hovering below 70 cents U.S., Canada’s currency is bracing for a potential plunge not seen since its rock-bottom days of 61.79 cents U.S. on January 21, 2002.
Stephen Johnston, a private equity guru at Omnigence Asset Management, didn’t mince words: “I think it would hit historic lows.” He paints a grim picture of a structurally weak Canadian dollar, battered by federal and provincial budget deficits, a current account shortfall, and loose monetary policy that’s quietly devaluing the currency. Add Trump’s tariffs to the mix, and it’s a recipe for skyrocketing inflation and a loonie in freefall. “This could be one of the worst economic events in modern history,” Johnston warned.
The tariff threat isn’t just a trade hiccup—it’s a full-blown economic gut punch. With Canada’s high taxes, sluggish growth, and “antagonistic” regulatory vibe already scaring off capital, the Bank of Canada might slash interest rates to soften the blow, piling even more pressure on the dollar, says Johnston. Meanwhile, Miro Svoboda of Sonora Wealth Group flags a U.S. advantage: a $4.5-trillion tax cut greenlit by the U.S. House could turbocharge American business, luring investment away from Canada and leaving the loonie in the dust.
If businesses can pivot with supply chain diversification, the loonie might claw back some stability in the long run, suggests analyst Roy. But for now, Svoboda warns of disrupted trade flows, market volatility, and a “bearish outlook” as foreign investment dries up. “A significant hit to Canada’s economic growth could compromise the dollar’s value,” he said, signaling stormy skies ahead for Canadians—and their wallets.