In foreign exchange market news dated 24–25 August, the United States imposed additional tariffs on Canadian products following the breakdown of trade talks between the two countries, while reports also covered the possible use of Treasury funding tools, the President’s tariff announcement and new economic sanctions on Iran. USD/JPY is expected to continue moving sideways in the upper-¥158 range.
U.S.-Canada trade talks broke down on 22 August, and the United States announced that it would impose additional 50% tariffs on approximately $20 billion worth of Canadian products. In response, Canadian Prime Minister Trudeau said Canada would impose retaliatory tariffs equal to those imposed by the United States from 8 September.
Reports indicated that the balance of the U.S. Treasury General Account (TGA) could potentially be used to fund the purchase and retirement of Treasury securities, prompting market discussion of efforts to contain interest rates. However, some market participants also believe that using the TGA could raise concerns about insufficient funds.
President Trump announced on social media that tariffs on Canadian automobiles, auto parts and steel would be raised to 50% from 1 January 2027.
The U.S. Treasury Secretary announced new economic sanctions against Iran and indicated a policy of restricting transactions with the country in five areas, including digital currencies and anti-money laundering measures.