08:08 AM EDT, 07/11/2025 (MT Newswires) -- Late Thursday, United States President Donald Trump published a letter to Canada to inform of the introduction of 35% tariffs from Aug. 1, noted Commerzbank.

Trump justified this by citing the large quantities of fentanyl allegedly entering the U.S. from Canada. Added to this was the fact that Canada had reacted to earlier tariffs, which Trump doesn't usually tolerate, wrote the bank in a note to clients.

Following the announcement, the Canadian dollar (CAD or loonie) understandably depreciated significantly, stated Commerzbank. It only recovered somewhat after reports emerged that USMCA-compliant goods would be exempt from the higher tariffs.

However, as is often the case, this remains unclear. The bank hasn't yet heard anything from Trump regarding this matter, and reports suggest that a final decision has yet to be made.

CAD traders shouldn't be too confident that Trump will leave his northern neighbours alone now, added Commerzbank. Although the downward trend in USD-CAD over several months was mainly due to the weakness of the US dollar (USD), the bank pointed out that this wouldn't necessarily continue indefinitely, given the weak state of the Canadian economy.

The announcement came as a surprise, added Commerzbank. Investors will now have to wait and see what Trump's final decision on USMCA-compliant goods will be, but the Canadian dollar is likely to face a turbulent few weeks ahead, according to the bank.