The Canadian dollar weakened after President Trump's plan to impose a 50% tariff on a broad range of goods. The escalation in trade tension "threatens to damage the Canadian economy and add to the strain of an already vulnerable currency," says Karl Schamotta, chief market strategist at forex firm Corpay.

The 50% duty will apply regardless of whether goods were previously exempted under USMCA's terms—removing a key protection for Canadian exporters. There are carve outs, such as energy, which Schamotta says should limit the macroeconomic blow.

Along with the tariffs, the White House unveiled measures aimed at building up aluminum-smelting capacity in the U.S., which Schamotta warns could hit Canada hard. Canada is America's top foreign supplier of the metal.