U.S. President Donald Trump’s ability to swiftly impose, and then delay, tariffs on top trading partners has left world markets swinging one way and then another.

Last weekend, for example, he announced sweeping tariffs on Canada, Mexico and China, and then on Monday he announced one-month delays for Canada and Mexico. These moves show that the risk of a global trade war that hurts economic growth and fuels inflation remains high.

But the reprieve for the so-called Loonie may not last since the prospect of 25% tariffs remains. Even if tariffs are avoided, uncertainty could weigh on business activity, keeping Canada on a rate-cutting path.

The tariff threats, direct and indirect, have seen the peso fall as much as 2.2% this year, and also gain as much as 3.5%.

In a scenario of 25% tariffs, Wall Street analysts expect the Mexican economy to fall into a recession. The peso, which ended January at 20.678 per dollar, is seen weakening to as much as 22 or further per dollar according to BBVA.

Source: FINANCE.YAHOO