'They asked too much': Canadian dollar slides as Ottawa and Washington head for all-out trade war

The Canadian dollar declined Monday morning after trade negotiations between Ottawa and Washington collapsed over the weekend, pushing both countries toward a full-scale trade war. ING strategists warned Monday that "as a smaller, more open economy, Canada has more to lose from this."

The breakdown leaves both nations facing higher import prices across a broad range of goods. The U.S. imposed new measures Saturday following the failed talks, though the specific tariff levels were not detailed in the initial reports.

The currency's weakness reflects immediate market concern over Canada's export-dependent economy and its asymmetric exposure to cross-border trade disruptions. With the U.S. as Canada's dominant trading partner, any prolonged tariff regime threatens to compress margins for Canadian exporters while raising input costs for manufacturers reliant on American components.

ING's assessment underscores the structural vulnerability: Canada's trade-to-GDP ratio leaves it more exposed to retaliatory measures than its larger neighbor, even as both economies face inflationary pressure from the dispute.