08:48 AM EST, 01/02/2025 (MT Newswires) -- Trade uncertainty with the possible United States tariffs is set to remain a headwind for the Canadian dollar (CAD or loonie) performance ahead of the upcoming review of the USMCA trade deal in July 2026, said MUFG.

The CAD would be significantly weaker than the bank's forecasts if President-elect Donald Trump follows through and imposes higher tariffs on Canada even if watered down, wrote MUFG in a note to clients published in December.

Trump has threatened to impose 25% tariffs on all goods imported from Canada.

The bank assumes that Canada will tighten broader controls to avoid tariffs and make concessions in the upcoming USMCA review