Canadian dollar falls as tariffs and Middle East risk rise

The Canadian dollar weakened against the U.S. dollar on Wednesday, July 22, 2026, as escalating trade tensions and geopolitical risks overshadowed a modest boost from higher oil prices. The currency pair USD/CAD traded around 1.4085, with the U.S. dollar finding support from fresh U.S. tariff threats against Canada and renewed Middle East instability.

The latest pressure on the Canadian dollar, or loonie, followed an announcement by U.S. President Donald Trump on July 20 imposing new tariffs on selected Canadian imports. U.S. Trade Representative Jamieson Greer later defended the administration's tariff strategy in televised remarks, reinforcing market concerns over a deepening trade dispute. Analysts have described the situation as a significant tariff shock for the Canadian economy, which is heavily reliant on trade with the United States.

These trade developments have introduced substantial uncertainty, with some analysts noting that new U.S. tariffs pose a headwind for the Canadian dollar and are likely to keep the USD/CAD pair above the 1.40 level in the near term. The currency had already been under pressure, with the pair recently testing multi-year highs.