What happened: Trade talks between the US and Canada collapsed after a three-day Washington summit. The US immediately slapped 50% tariffs on roughly $20bn of Canadian goods, prompting Canadian Prime Minister Mark Carney to vow dollar-for-dollar retaliation starting September 8 targeting US steel, dairy, and electronics.
Why it matters: This sudden escalation shatters illusions of a de-escalation in North American trade, sending shockwaves through FX markets with the Canadian dollar under heavy pressure. For crypto and broader risk assets, sudden geopolitical and trade wars reintroduce macro volatility, potentially dampening risk-on sentiment as investors re-evaluate cross-border economic stability.
