The EUR/CAD pair continues its gains for the second session in a row, trading around the 1.6150 level during European hours on Monday. The currency pair is supported as the euro (EUR) rose after European Union ambassadors agreed on Sunday to step up efforts to deter US President Donald Trump from imposing tariffs on European allies, while also preparing for retaliatory measures if tariffs go ahead.
US President Donald Trump said on Saturday that he would impose customs duties on eight European countries that oppose his proposal to acquire Greenland. Trump has stated that a 10% tariff will be imposed on goods from EU members Denmark, Sweden, France, Germany, the Netherlands and Finland, as well as Britain and Norway, starting February 1, until the US is allowed to purchase Greenland, according to Bloomberg.
The EUR/CAD pair is also rising, with the commodity-linked Canadian dollar struggling against the euro after oil prices pared daily gains. The price of West Texas Intermediate (WTI) crude oil is trading at around $59.00 per barrel at the time of writing.
Crude oil prices lost ground amid easing tensions with Iran, reducing concerns about potential supply disruptions. Market anxiety calmed after US President Donald Trump indicated last week that he might postpone any military action, following Iran’s pledge not to carry out executions of protesters. However, Trump warned that strong action could still be taken if executions resume, leaving some geopolitical risk premium in the market.
However, oil prices remain in positive territory, supported by key economic data in China. China’s industrial production rose 5.2% year-on-year in December, accelerating from 4.8% in November, supported by resilient export-led manufacturing activity. China’s GDP expanded 1.2% quarter-on-quarter in the fourth quarter of 2025, up from 1.1% in the third quarter and above expectations of 1.0%. On an annual basis, growth fell to 4.5% from 4.8% but exceeded expectations of 4.4%.
(The story was corrected on January 19 at 8:45 GMT to say in the first point that EUR/CAD is supported, not EUR/JPY.)
Frequently asked questions about definitions
Tariffs are customs duties imposed on imports of a specific good or category of products. Tariffs are designed to help domestic producers and manufacturers be more competitive in the market by providing a price advantage over similar goods that can be imported. Tariffs are widely used as protectionist tools, along with trade barriers and import quotas.
Although tariffs and taxes generate government revenue to finance public goods and services, they have many differences. Tariffs are paid in advance at the port of entry, while taxes are payable upon purchase. Taxes are imposed on individual and corporate taxpayers, while importers pay tariffs.
There are two schools of thought among economists regarding the use of definitions. While some argue that tariffs are necessary to protect domestic industries and address trade imbalances, others see them as a harmful tool that could drive up prices in the long run and lead to a destructive trade war by encouraging tit-for-tat tariffs.
During the run-up to the November 2024 presidential election, Donald Trump made clear that he intended to use tariffs to support the US economy and American producers. In 2024, Mexico, China and Canada account for 42% of total US imports. During this period, Mexico emerged as the largest exporter with $466.6 billion, according to the US Census Bureau. Hence, Trump wants to focus on these three countries when imposing tariffs. He also plans to use revenue generated by the tariffs to reduce personal income taxes.
