Canadian dollar falls to lowest level in eight months.

TRUMP TARIFF THREATS HANG OVER CURRENCY

The Canadian dollar fell to its lowest level in eight months on Monday, and the downward trend appears likely to continue until U.S. President Donald Trump decides what he is going to do on trade.

As the seventh round of NAFTA negotiations took place in Mexico City last week, the Trump administration fired its latest trade salvo in theformofanannouncementthatit planstointroducea25percenttariff on imported steel, and a 10 per cent tariff on imported aluminum.

Since Canada is America’s largest source of imported steel and aluminum, and recent domestic economic data has fallen short of expectations, it should come as little surprise that the announcement hurt the loonie.

With Canada, China, Brazil, the European Union and others threatening retaliation, markets around the world have sold off on Trump’s threats, as a trade war could put an end to the coordinated global economic growth that has propelled stocks.

“President Trump’s plans to implement wide reaching tariffs on steel and aluminum, and openness to starting a trade war against pretty much everyone, continues to have far reaching ramifications on world markets,” said Colin Cieszynski, chief market strategist at SIA Wealth Management.

Worries about cross-border commerce have re-emerged at a time when the Bank of Canada looks set to pursue a more cautious monetary policy versus the U.S. Federal Reserve, domestic oil prices remain stubbornly low and Canada faces a still-wide current account deficit.

The Canadian dollar has declined more than five per cent since its recent peak of US81.5 cents on Feb. 1.