Trump, Trade, and the Canadian Dollar

Trump threatens Canada with “the ruination of the economy”


While Canada’s chief NAFTA negotiator, Chrystia Freeland, and the US negotiator, Robert Lighthizer, left the talks on Friday without a resolution, the US President continued his approach of make threats today, then put a positive spin on things when he eases back pressure tomorrow.  Trump had originally placed a deadline of last Friday, or he would slap large tariffs on auto exports, leading to his comments on economic ruination.  For now, at least, he has not followed through on the threats. 


While Freeland has been consistent in her rhetoric that a new trade deal has to be one which is good for Canada, and has expressed, and continues to express belief that everyone at the table wants to achieve a solution that works for all three countries, the Canadian Prime Minister finally weighed in last week with his strongest words to date.  “We will not be pushed into accepting any old deal, and no deal might very well be better for Canada than a bad deal” he said while speaking at the University of Chicago last week. 


The key elements that remain as sticking points in the negotiations are;



Trudeau has said he will not agree to any agreement that does not contain the Chapter 19 dispute resolution mechanism.



So where are we now? 


Trump has signalled to Congress that he intends to enter a new trade deal with Mexico.  The rules state that he must give 90 days notice on any new trade deals, and with Mexican President Pena Niento leaving office on Dec. 1st, Trump had to get that to Congress by Aug. 31st.


Both Trump and Trudeau are now looking towards their own elections, and you can bet that settling this trade issue will be a top priority for both.  Trump wants to be able to point to his Negotiator-in-Chief status, and Trudeau’s re-election may rest on his ability to get through this NAFTA negotiation with anything that can be spun into a ‘win’ for Canada.


What can be said is that both Freeland and Lighthizer are level-headed and understand the significance of the negotiations.  With regards to the newest Oct. 1st deadline, as Freeland has put it’ “we’re continuing to work very hard and we’re making progress, but we’re not there yet.”


As is always the case, uncertainty is bad for CAD, and this is a critical uncertainty.  Expect CAD to remain under pressure for now.



Author: John Glover


White Papers



FX Hedging:

10 Common Pitfalls


Commodity & FX Risk:

An Integrated Approach


The Corporate Use of Credit Derivatives:

Where Next?


Corporate Hedger’s Guide to Basel III


Currency Volatility – Are markets nearing an inflection point?



FX Risk


“Validus designed an innovative and practical hedging strategy to address our underlying FX risk in the context of very distinct and diverse sources of competition. We are delighted with the outcome and impressed with their on-going response to the changing business and market dynamics”.


Paul Stobbs, Managing Director, Attraction World


Private Equity


 “The Validus team understand how private equity thinks about financial risk management issues and they are rigorous in the way they help our portfolio companies to understand and mitigate their risks.”


James Markham, Partner – Portfolio Management, Graphite Capital LLP


FX and Commodity Risk


“Validus provides us with independent strategic advice relating to our long-term currency and commodity risk management program.  The people are extremely capable and collaborate very well with our finance and operations teams here at JD Irving.”


Mark Bettle, Director, J.D. Irving Ltd.


FX  Risk


 “Validus developed a tailored hedging solution to mitigate the risks from our unique combination of existing supplier agreements. The implementation and management of this rolling hedging programme with our FX service providers has been expertly and efficiently handled”.  


Mark Goldby, Finance Director, SMS Electronics Ltd.


Commodity Risk


“Validus worked with us to develop a comprehensive commodity risk management programme – their analysis was both insightful and actionable.   We particularly value their independence, and they continue to work alongside our internal team to ensure our commodity price risks are managed effectively”

Gerry Gray, Finance Director, Strix Ltd.


FX, Commodity & Interest Rate Risk


“Validus comes up with risk management solutions that are innovative and comprehensive but practical to implement, that is their strength compared to other consulting companies we have worked with in the past.  Validus provided valuable insights into how FX, interest rate and commodity risks impact our organisation, and provide actionable recommendations and solutions.”


Andrew Ayres, Finance Director, U-POL Ltd.

Recent Comments