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The Canadian dollar is flat in early trading but slightly undeperforming in a broad US dollar selloff. The reason is that Trump on the weekend threatened 100% tariffs against Canada.Trump said the tariffs will come if Canada "makes a deal with China." "China will eat Canada alive, completely devour it, including the destruction of their businesses, social fabric, and general way of life," Trump said in a post on his Truth Social website this morning."If Canada makes a deal with China, it will immediately be hit with a 100% Tariff against all Canadian goods and products coming into the U.S.A." Trump didn't clarify what kind of deal that might be. Last week Trump seemed to endorse the small deal Canada made to import 49,000 EVs in exchange for dropping agricultural tariffs."That's what [Carney] should be doing. It's a good thing for him to sign a trade deal. If you can get a deal with China, you should do that," Trump told reporters at the White House.However Mark Carney stole the show from Trump at Davos with a memorable speech that declared the end of the US-led world order. That seemed to irk Trump and led to the latest threat.In any case, Treasury Secretary Scott Bessent walked back the threat and said on the weekend that it would only apply if Canada signed a free trade agreement with China, something that's not even on the table and is already prohibited under USMCA."We have no intention of doing that with China or any other nonmarket economy," Carney said. "What we have done with China is to rectify some issues that developed in the last couple of years."So the whole thing is basically political theater.USD/CAD is down 8 pipis to 1.3692 so far in Asia. That's near the lows of the month. This article was written by Adam Button at investinglive.com.
