08:35 AM EDT, 07/22/2026 (MT Newswires) -- The Canadian dollar is little changed early Wednesday, indicating that this week's US tariff threats are keeping investors cautious and offsetting the positive impact typically associated with higher oil prices, according to Corpay in a note.

Oil prices are hovering near six-week highs amid a worsening medium-term supply outlook, as the US and Iran continue exchanging military strikes in the Middle East.

Corpay's estimates indicate that the new tariff measures would lift the effective tariff rate on Canadian exports to the US to about 7.4%.

Although low by historical standards, the higher tariff burden could still weigh on growth and demand for Canadian assets due to the country's reliance on the US markets, wrote Karl Schamotta, Corpay's chief market strategist, in the note.

The resurgence of trade uncertainty has introduced fresh risks to the Bank of Canada's outlook, added Corpay. "Although the Bank of Canada had been forecasting a rebound driven by a reduction in uncertainty, that expectation is now in serious doubt."

Should the administration of President Donald Trump implement the threatened tariffs, market expectations for a BoC rate increase this year "will collapse," said Corpay.