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What Every Trader Should Know About Canada Tariffs
Apr 11, 2025
Canada and the United States are each other’s largest trading partners, with the 2022 trade balance showing a surplus of $46 billion for the U.S. when including goods and services. The two countries do a lot of business together. Changes to any trade agreement from Trump’s tariffs 2025 can create uncertainty for companies on both sides of the border.
For example, in July 2020, the U.S.-Mexico-Canada Agreement (USMCA) took effect, replacing the North American Free Trade Agreement (NAFTA), which had been in place since 1994. What does this have to do with Canada tariffs? The U.S. and Canada do not impose significant tariffs on each other’s goods as allies. However, businesses must adapt to new rules in trade agreements, even if they are not about tariffs. Changes can impact the flow of goods across the U.S.-Canada border.
Table of Contents
What Every Crypto & Forex Trader Needs to Know About Canadian Tariff Policy
Common Challenges When Trading Around Canada’s Tariff Policy (And How to Overcome Them)
What Are Tariffs and Why Do They Matter to Markets?
A tariff is a tax or duty placed on imported goods and services by a country's government. When a product crosses a border, the government may charge the importer a percentage of its value or a fixed amount. This cost is usually passed on to consumers, making imported goods more expensive. For example, suppose Canada imposes a 20% tariff on imported U.S. cheese. In that case, a distributor must pay that extra cost, and the final consumer might see a higher price tag at the grocery store.
Why Do Governments Impose Tariffs?
Tariffs aren’t just financial tools — they serve strategic political and economic purposes. Here's why countries like Canada implement them:
Protect Domestic Industries
Tariffs make foreign goods more expensive, giving an edge to locally produced alternatives. This protects sectors considered vital to national identity, employment, or long-term resilience — such as dairy, lumber, or auto manufacturing in Canada.
Encourage Local Investment
Governments can promote domestic production and innovation by shielding domestic markets from foreign competition, supporting local jobs and supply chains.
Generate Revenue
While not the primary purpose in developed economies like Canada, tariffs still bring in money to fund government operations.
Political Leverage in Trade Disputes
Tariffs are often used as a negotiation tool or retaliation during trade conflicts. For example, when the U.S. imposed steel tariffs under Section 232, Canada responded with retaliatory tariffs on U.S. aluminum and consumer goods.
Correct Trade Imbalances
Tariffs can reduce overreliance on imports and encourage balanced trade relationships, especially with countries running large surpluses.
Types of Tariffs
Understanding the structure of tariffs helps traders analyze how impactful a new policy might be:
Ad Valorem Tariff
A percentage of the value of the good (e.g., 10% of the product’s price). Used widely in Canada's customs framework under the CBSA.
Specific Tariff
A fixed fee per quantity or weight (e.g., $5 per kg of imported produce).
Tariff Quotas
Allow a specific volume of imports at low or no tariff; beyond the quota, higher rates apply. This is common in Canadian dairy and poultry supply management.
Retaliatory Tariffs
Targeted tariffs are imposed in response to unfair trade practices or foreign tariffs.
Countervailing Duties
Imposed to offset foreign subsidies that create unfair competition.
How Tariffs Impact the Economy
Tariffs may look like simple taxes on paper, but their effects ripple throughout the economy. For traders, the ripple effect is an opportunity, as it changes the behavior of businesses, consumers, and central banks.
Tariffs Raise Consumer Prices
Importers pass on the additional cost to retailers and buyers.
This can raise inflation, especially in import-heavy economies.
Traders watch for inflationary pressure that could influence central bank policy.
Tariffs Disrupt Supply Chains
If tariffs make key materials more expensive or less accessible, businesses must reorganize how and where they source components.
This leads to volatility in production output, earnings, and employment.
Forex markets often react quickly to changes in manufacturing and export flows.
Tariffs Can Trigger Trade Retaliation
If one country imposes tariffs, the other may respond in kind.
This can escalate into a trade war, which shakes confidence and drives risk-off behavior across global markets.
Tariffs Can Attract or Repel Foreign Capital
If tariffs are seen as protecting local industries successfully, investors may become bullish on that economy.
This can strengthen the domestic currency.
Conversely, capital may flee if tariffs create political risk or stunt growth, weakening the currency.
Why Tariffs Matter to Traders
Tariffs often lead to short-term volatility and long-term trend shifts, especially in currency, commodities, and equity markets. Here’s how that plays out:
Forex Traders Track how tariffs affect
Trade balances (exports vs. imports),
Currency strength (CAD vs. USD, CAD vs. JPY)
Inflation and central bank responses
Crypto Traders Watch tariffs as macro triggers
Increased fiscal stress or economic uncertainty can drive Bitcoin as a hedge.
Regulatory shifts or trade friction may increase capital flows into decentralized assets.
Commodity Traders
Tariffs on raw materials like lumber, steel, or agricultural products can drive sharp moves in spot and futures contracts, especially those tied to Canadian exports.
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What Every Crypto & Forex Trader Needs to Know About Canadian Tariff Policy
Tariffs Spark Market Volatility
Tariffs between major trading partners like Canada and the U.S. signal economic tension, creating market movement. When Canada imposes retaliatory tariffs, it directly responds to protectionist U.S. policies like Trump’s steel and aluminum tariffs. This creates market uncertainty, especially for CAD/USD pairs, trade-related equities, and risk sentiment across crypto and forex. Traders LOVE volatility — but only if they’re prepared.
Forex Focus: CAD/USD in the Crosshairs
Tariff retaliation can directly shake the Canadian dollar. Here it works: A tariff war can slow cross-border trade, hurting Canadian exports. Less export demand equals a weaker CAD (especially against USD). Traders on GoMoon watching CAD/USD pairs could short the CAD on negative trade balance data. They could look for momentum setups after major tariff headlines and watch for BoC (Bank of Canada) rate decisions reacting to trade impacts. GoMoon's real-time news scanner and forex sentiment tracker are tools here: You’ll get alerts when tariff-related sentiment starts moving CAD/USD or USD-index pairs.
Crypto Traders: Watch the Macro Spillover
Even though crypto isn’t directly affected, the macro fallout affects crypto behavior in these ways: If trade wars weaken global confidence, money moves into “safe” risk-off assets like gold, USD, or even BTC, and stablecoins (USDT/USDC) during uncertainty. A stronger USD could mean a weaker BTC/USD in the short term. However, long-term global trade stress can also boost BTC as a hedge against fiat instability.
Example
If U.S.-Canada tensions escalate, and the CAD crashes, some traders rotate into BTC, causing short-term price spikes. GoMoon’s on-chain signal alerts and news API help you catch this move before it hits mainstream headlines.
Smart Traders Use Tariffs as News Triggers
Whether you trade daily or swing the markets, tariffs create sentiment shifts that drive sudden drops in CAD or equities, BTC pumps on flight-to-safety narratives, and price consolidations after a policy resolution. With GoMoon, you can set up AI-monitored alerts for “tariff,” “retaliation,” or “trade war” headlines. You can backtest how CAD/USD and BTC have historically reacted to similar news. You can auto-generate TA setups based on volatility spikes.
Tariffs Are Not Just Trade News — They’re Market Catalysts
To the average person, tariffs are government policy. But to a savvy trader, they’re a heads-up that volatility is coming. They influence capital flows, interest rate expectations, and risk appetite. They’re a chance to front-run the herd. GoMoon turns that macro chaos into opportunity by giving you real-time macro and micro alerts. They let you ride the narrative early with confidence. They link global trade events to actionable setups in crypto and forex markets.
GoMoon transforms economic calendar data with AI-powered insights for smarter trading decisions. Our platform analyzes global events and rates their market impact on a scale of 1-10, helping you understand how they'll affect various assets. We've packed everything traders need: Live economic event streaming, custom notifications, and historical event replay with TradingView charts. What sets us apart is our comprehensive approach to event analysis.
Whether you're tracking the impact of major economic announcements or comparing forecast data with actual outcomes, GoMoon provides clear, actionable insights. You can personalize your calendar, stream live meetings directly on the platform, and analyze historical events like the dot-com bubble or COVID-19 crash to understand market reactions better. GoMoon clarifies the complex world of economic events for traders seeking data-driven decisions. Get started for free to get AI-powered economic insights today.
Related Reading
Common Challenges When Trading Around Canada’s Tariff Policy (And How to Overcome Them)
Late Reactions to News = Missed Profits
When trade news breaks, markets react quickly. Often, there's a lot of noise as the mainstream media picks up the story days or weeks after the initial news. By the time they cover it, the market has already priced it. Retail traders often jump in after the big move — buying the top, shorting the bottom.
How to overcome it
Use GoMoon’s macro keyword alerts for terms like “Canada tariff,” “surtax,” or “retaliation.”
Combine alerts with on-chain or forex sentiment shifts — you’ll get the jump before the wave hits retail traders.
Timing is everything. Be early, not loud.
Confusing Long-Term Trends with Short-Term Hype
Not every tariff headline is a game-changer. Some are just posturing or announcements with no real teeth, but traders still react emotionally, blowing up their setups.
How to overcome it
Check if the tariff involves core commodities or marginal goods (steel vs. picnic coolers).
Use GoMoon's data overlays to compare historical price reactions to similar news events.
Trade the reaction, not the emotion — don’t fall for fake breakouts if volume doesn’t confirm.
Zoom out and check if it’s a spike or a cycle.
Overtrading Volatility = Fast Losses
Tariff volatility can be exciting, but overtrading it with lousy risk management can result in rapid losses on sudden reversals.
How to overcome it
Set tight SL (stop-loss) parameters after tariff news, especially on CAD pairs or BTC/USD.
Use GoMoon’s volatility zone indicators to know when to scale in/out — don't enter blindly on a spike.
Limit trades to 2–3 clean setups max during tariff news cycles. Let the market come to you — don’t chase noise.
Not Connecting the Dots Across Markets
Traders often watch just one chart, but tariffs affect multiple asset classes: CAD, oil, Canadian equities, U.S. indices, BTC—they’re all connected.
How to overcome it
Set up GoMoon’s multi-market monitoring — track CAD, oil, and BTC sentiment together.
Watch how WTI crude moves with CAD (Canada is a major oil exporter).
Use BTC risk barometer tools to know if crypto will follow equities or detach.
Tariffs ripple. Follow the chain, not just the headline.
Not Preparing for Policy Reversals or Exemptions
Tariffs don’t last forever. A sudden policy rollback or exemption list update can reverse trades instantly.
How to overcome it
Stay subscribed to Canada’s Department of Finance updates and embed those links in your GoMoon news filter.
Always have a "what-if" plan for reversals.
Scale out slowly instead of going all-in on one bias. Be prepared to flip the bias when the rules change.
GoMoon transforms economic calendar data with AI-powered insights for smarter trading decisions. Our platform analyzes global events and rates their market impact on a scale of 1-10, helping you understand how they'll affect various assets. We've packed everything traders need: Live economic event streaming, custom notifications, and historical event replay with TradingView charts. What sets us apart is our comprehensive approach to event analysis.
Whether you're tracking the impact of major economic announcements or comparing forecast data with actual outcomes, GoMoon provides clear, actionable insights. You can personalize your calendar, stream live meetings directly on the platform, and analyze historical events like the dot-com bubble or COVID-19 crash to understand market reactions better. GoMoon clarifies the complex world of economic events for traders seeking data-driven decisions. Get started for free to get AI-powered economic insights today.
Use Our AI-powered Economic Calendar Tool for Free Today
It's hard to predict what Trump tariffs will look like in 2025. Tariffs have been a moving target since their inception. While the Biden administration has kept many of these tariffs in place, they have also opened negotiations with trading partners to help ease the burden on American consumers and businesses. As a result, some tariffs have been eliminated, and others have been modified. In the meantime, the tariffs that remain are under constant scrutiny as various interest groups lobby for their removal.
What Will Be the Impact of Trump Tariffs in 2025?
The impact of tariffs in 2025 will depend on the state of the economy and the level of trade relations between the U.S. and other countries. If the economy is in recession, the tariffs could worsen the downturn by reducing trade and causing further job losses in affected sectors. As history has shown, both the Trump and Biden tariffs have had significant negative impacts on the economy, and removing them could help facilitate a recovery.
GoMoon transforms economic calendar data with AI-powered insights for smarter trading decisions. Our platform analyzes global events and rates their market impact on a scale of 1-10, helping you understand how they'll affect various assets. We've packed everything traders need: Live economic event streaming, custom notifications, and historical event replay with TradingView charts. What sets us apart is our comprehensive approach to event analysis.
Whether you're tracking the impact of major economic announcements or comparing forecast data with actual outcomes, GoMoon provides clear, actionable insights. You can personalize your calendar, stream live meetings directly on the platform, and analyze historical events like the dot-com bubble or COVID-19 crash to understand market reactions better. GoMoon clarifies the complex world of economic events for traders seeking data-driven decisions. Get started for free to get AI-powered economic insights today.
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