Since Donald Trump’s inauguration, the Canadian dollar has declined by 0.5%, while the Mexican peso has increased by 3.5%. Analysts cite Canada’s greater exposure to tariff pressures and a tougher negotiating stance under new Prime Minister Mark Carney, contrasting with Mexico’s more conciliatory approach. Expectations for upcoming tariff details highlight potential advantages for Mexico in negotiations.
The Canadian dollar is currently experiencing significant challenges against the U.S. dollar, diminishing by 0.5 percent since Donald Trump’s inauguration, contrasting with a 3.5 percent appreciation of the Mexican peso. In a comparison of 16 major currencies, the loonie ranks near the bottom, with performance hindered by its economy’s susceptibility to tariff pressures, as argued by analysts.
Nick Rees, head of macro research at Monex Europe Ltd., noted that Canada’s economic landscape exposes it more to tariff threats compared to Mexico, which possesses stronger negotiating leverage. The recent election of Mark Carney as Liberal leader further complicates the situation, as he has adopted a firm stance against U.S. tariffs, asserting that Canada will not retract its retaliatory measures until respect is ensured from the U.S. administration.
Mexico’s President Claudia Sheinbaum has opted for a more conciliatory approach, potentially facilitating smoother negotiations. U.S. Commerce Secretary Howard Lutnick commended Mexico and the U.K. for their measured responses, indirectly criticizing Canada for its retaliatory stance. Analysts from JPMorgan Chase noted that Mexico’s more proactive communication with the U.S. might grant it preferential treatment in tariffs, although current negotiations seem limited in scope regarding exports.
Looking ahead, expectations for tariff details loom, particularly regarding sectoral tariffs that may be unveiled on April 2. Analysts foresee Mexico could negotiate favorable terms in sectors such as automotive, contingent upon limiting imports from China. Meanwhile, the Canadian dollar continues to suffer, with experts suggesting market perceptions lean towards potential interest rate cuts by the Bank of Canada amid ongoing tariff uncertainties and declining consumer sentiment.
The Canadian dollar has struggled more than the Mexican peso amid ongoing tariff tensions, attributed to the former’s higher vulnerability to economic pressures from the U.S. The election of Mark Carney signals a tough approach to negotiations with the U.S., while Mexico’s measured responses may yield better outcomes. Analysts predict that as the situation unfolds, Mexico’s proactive strategies may offer an advantage in tariff negotiations, contrasting with Canada’s challenges in establishing favorable conditions.
Original Source: financialpost.com
