Exporters in Canada are looking to find alternative methods to transfer goods into the US as President Trump looks set to introduce his promised 10% tax. Several Canadian businesses are even considering moving production into the United States as it may not be viable to continue with existing production and pay the tax. The Bank of Canada have commented on the situation suggesting they’re looking into what might be alternative solutions, recognising that businesses investing in the US and not Canada could have a detrimental effect on the economy.

National Bank Financial estimate that the tax could reduce Canadian exports by 9%, currently 74% of Canada’s exports are sent south to the United States. There is optimism that due to close nature of the countries that Canada may be left out of Trumps tariffs, however the uncertainty alone could have a significant effect on the Loonie.

Keystone XL Pipeline to boost profits

Canadian oil companies on the other hand could be in for a windfall with the signing of the executive order to complete the Keystone pipeline line. The project would connect the Canadian oil fields directly with export terminals on the Gulf Coast. There is a capacity issue in the existing infrastructure and many barrels end up being transported slowly on trains. The pipeline would enable Canada’s oil fields to run at complete capacity and move all the oil in the most efficient way.

The effect Trump is having on the Canadian economy is showing and the Loonie could start to come under further pressure as businesses make major decisions. The CAD has lost nearly 10 cents in the last ten days against Sterling and this trend could continue as it remains unclear what the future holds.

Keeping contact with your broker means they can provide you with the latest market information. If you have a GBP/CAD requirement it may be a good idea to cash in on the 6% improvement in the rate. Call us on 01494 725 353 to see how much we could save you.

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