The U.S. dollar rose on Friday, supported by escalating global trade tensions after President Donald Trump announced new tariffs on imports, including a 35% levy on neighboring Canada, along with plans to impose broad tariffs of 15% or 20% on most of the United States’ trading partners.
The latest trade blow to Canada came as a surprise to investors, who had expected Ottawa to reach a new economic and security agreement with Washington.
The Canadian dollar fell 0.22% to 1.369 CAD per U.S. dollar, after an initial drop of over 0.5% immediately following Trump’s tariff announcement, which is expected to take effect on August 1.
The euro also declined 0.1% to 1.1688 dollars, heading for a weekly loss of 0.9%, after Trump said the European Union may receive a letter specifying the new tariff rates by Friday, raising doubts over the progress of trade talks between Brussels and Washington.
Piotr Matys, senior FX strategist at InTouch Capital Markets, said: “Officials in many countries who have been negotiating in good faith with the Trump administration may now wonder whether the president will raise the bar — as he did with Canada — in the final moments of the talks.”
Although market reaction to this latest wave of tariffs was limited compared to the heavy selling seen in April on “Liberation Day,” concerns still linger among investors regarding the future of global trade and whether the August 1 deadline is truly final.
These concerns worked in favor of the U.S. dollar, which rose 0.2% against a basket of currencies to reach 97.79, on track to record its biggest weekly gain since February, with a 0.8% increase.
The dollar was also supported by:
– Data showing the resilience of the U.S. labor market.
– The minutes of the latest Federal Reserve policy meeting, which tempered market expectations for an imminent interest rate cut.
Matys added: “Most investors see this recent dollar rally as a short-term corrective rebound, not a lasting reversal. President Trump’s policies have undermined the dollar’s status as the world’s premier reserve currency.”
Despite the current rally, the dollar index remains down 9% since the start of the year, amid concerns that upcoming data could reflect the negative effects of Trump’s policies on the world’s largest economy.
Tariff Impact on Other Currencies
The Japanese yen fell 0.41% to 146.91 per dollar, heading for a weekly loss of about 1.5%, after Trump imposed a 25% tariff on Japan earlier this week.
The Brazilian real, which traded at 5.532 per dollar, is on track for a 2% weekly loss — its biggest drop in about five months — after Trump surprised Brazil by adding it to the tariff list.
President Luiz Inácio Lula da Silva said he is seeking a diplomatic solution to the tariff crisis but pledged a reciprocal response if the tariffs are enacted on August 1.
The British pound dropped 0.31% to 1.3538 dollars, approaching its lowest level in two weeks, after the U.K. economy unexpectedly contracted for a second consecutive month in May.
Bitcoin Hits New Record Above $118,000
In contrast, cryptocurrencies posted strong gains, driven by increasing institutional demand and supportive U.S. policies toward digital assets.
Bitcoin rose 3.7% to a new all-time high of $118,407.96.
Ethereum jumped 5.7% to $2,980.15.
Zhang Wei Liang, currency and credit strategist at DBS Bank, said: “This new record reflects the resilience of global risk appetite despite Trump’s tariffs, and also shows strong optimism regarding the crypto legislation expected to be discussed during what is being called ‘Crypto Week’ in Congress.”
