US-Canada trade tensions flare as Trump suspends talks and raises tariffs, leaving the Canadian dollar under pressure, Commerzbank's FX analyst Michael Pfister notes.

CAD under pressure amid fresh US tariff hike

"After the Canadian region Ontario published an advertisement featuring former US President Ronald Reagan emphasising the disadvantages of tariffs, Donald Trump responded negatively. On Thursday night, he suspended the ongoing trade talks with Canada."

"Ontario then announced that it would stop broadcasting the advertisement, but only from the beginning of this week. Trump suspected 'dirty tricks' and increased tariffs on Canadian imports by 10 percentage points. As is often the case, it is unclear which products this affects."

"Canada currently benefits from both the USMCA and other exemptions, and has so far paid 35% tariffs on the smaller portion without exemptions. Nevertheless, this is not good news for the CAD. The CAD is only likely to appreciate again when progress is made in this conflict."