Trade War Escalation: Trump Targets Canada with 50% Tariffs; Eases Venezuela Oil Sanctions

Geopolitical volatility returned to the forefront of FX markets this week as the Trump administraton utilized aggressive trade levers across the Americas.

CAD Under Pressure

President Trump threatened to impose a 50% tariff on all aircraft sold from Canada to the US, accusing Ottawa of unfairly blocking certification for American business jets. This specifically targets Canada's aerospace sector and introduces significant downside risk for the Canadian Dollar (CAD), which is already grappling with broader US protectionist sentiment.

Shift in Oil Dynamics

In a simultaneous pivot, the US Treasury has authorized US entities to extract and export Venezuelan oil, provided the transactions avoid Russian entanglements. Conversely, Trump signed an executive order declaring a “national emergency” to sanction nations supplying oil to Cuba. This mixed approach—punishing allies (Canada) while pragmatically opening supply lines with adversaries (Venezuela)—suggests a transactional foreign policy that could lead to erratic swings in WTI Crude prices.

Key Data Snapshot

• Trade Policy: 50% tariff proposed on aircraft imports from Canada.
• Sanctions Update: US Treasury authorizes extraction of Venezuelan oil; tightens supply to Cuba.
• Market Impact: Increased downside volatility for CAD and erratic WTI Crude price action.