US President Donald Trump said the exchange-rate gap between the Canadian and US dollars was no longer sustainable, describing the imbalance as “unacceptable.”
At the current exchange rate, 1 US dollar is worth approximately 1.38 Canadian dollars. Accordingly, 1 Canadian dollar is worth about 72 US cents.
The Canadian currency has remained weaker against the US dollar for most of the past 15 years. Based on the long-term average, 1 US dollar is worth approximately 1.24 Canadian dollars, while the Canadian dollar has mostly traded at between 1.20 and 1.45 to the US dollar since 2015.
During part of the 2007-2012 period, when commodity prices rose, the Canadian dollar reached parity with the US dollar or became stronger. The weakness of the Canadian dollar makes Canadian products cheaper for buyers in the US while making US products more expensive for consumers in Canada.
Trump had previously criticized the trade deficit between the two countries as part of the ongoing trade war. Trade talks between the US and Canada broke down after Canadian Prime Minister Mark Carney’s negotiators were recalled from Washington.
Tariff and retaliation tensions
Following the breakdown in talks, the US administration moved to impose a 50% tariff on key Canadian products. Carney said Canada would impose tariffs at the same rate in response to those introduced by the US from September 8.
It remains unclear whether Trump will take any action over the difference between the Canadian and US dollars.