March 2025 was a rollercoaster month for Canada’s financial and currency exchange markets, as global tensions and domestic responses sent ripples across the economy.

U.S. Tariffs Shake Up Trade Relations

On March 4, the U.S. imposed a sweeping 25% tariff on all Canadian imports, citing security and immigration concerns. In response, Canada hit back with $30 billion in counter-tariffs targeting American steel, aluminum, and consumer goods. The back-and-forth escalation raised concerns about prolonged trade friction, fueling uncertainty across multiple sectors.

Canadian Dollar Under Pressure

The Canadian dollar initially dipped to a one-month low following the announcement of the U.S. tariffs. However, by mid-March, the loonie regained some ground as investors speculated the Bank of Canada might pause its interest rate cuts. Currency markets remained volatile, driven by daily shifts in sentiment around trade negotiations.

Interest Rate Cut to Cushion the Blow

On March 12, the Bank of Canada responded with a 25-basis point cut, bringing the policy interest rate down to 2.75%. Governor Tiff Macklem emphasized the central bank’s intent to shield the economy from inflationary pressures tied to tariffs. The move was seen as proactive, aiming to keep consumer prices in check and support economic stability.

“In times of uncertainty, the smartest move is to stay informed and act strategically. Currency markets react fast—make sure you move faster.”

Stock Markets React to Uncertainty

The S&P/TSX Composite Index slipped from record highs early in the month, reflecting investor concerns over trade disruptions. But by late March, markets bounced back on hopes that U.S. tariffs might be more targeted than initially feared, lifting sentiment on both sides of the border.

Retail Giant Collapses

In a major shake-up for the retail sector, Hudson’s Bay Company filed for creditor protection and announced the closure of 74 out of 80 stores nationwide, including all Saks Fifth Avenue and Saks Off 5th locations. The move will result in over 9,000 job losses, marking a significant shift in Canada’s retail landscape.

What This Means for You

For individuals and businesses involved in currency exchange or international transfers, this month highlighted the importance of market timing and strategic planning. Volatility in currency rates and policy shifts can have a direct impact on your bottom line. Services like CDFE help you stay ahead by offering competitive rates and smarter transfer solutions.