The potential exclusion of oil from upcoming US trade tariffs could significantly alter the economic landscape, particularly in the context of US-Canada trade relations. If energy products are exempted, the overall negative impact of tariffs on the US economy might be mitigated, as the US holds a trade surplus with Canada when oil is excluded. This development could also prevent a substantial increase in the USD/CAD exchange rate, as the anticipated tariff impact would be lessened.
The announcement of tariffs typically leads to currency depreciation for affected countries due to expected trade imbalances. However, excluding oil from these tariffs could limit this effect, particularly for Canada. The recent tariff headlines have already caused fluctuations in currency pairs, with USD/CAD and USD/MXN reflecting market sentiment and risk assessments in response to US trade policies.
As of 16:13 on January 30, Brent crude oil is trading at $76.09, slightly down from its last close of $76.58. The market's reaction reflects the uncertainty surrounding potential tariff exclusions and their implications for the energy sector.