The Canadian dollar fell to a 14-month low and the Mexican peso was under pressure, after the U.S. slapped tariffs on the Canadian lumber industry, sparking fears the U.S. will get tougher on trade with the neighbors on its northern and southern borders.
However, analysts say the fears appear overblown since the U.S.-Canadian dispute over soft lumber dates back to the 1980s and has previously involved tariffs. They also say this is not an indication of broader protectionism that markets had feared could come from the Trump administration.
The Canadian dollar fell nearly 1 percent against the U.S. dollar, while the peso was down more than 1.2 percent.
The action also comes as the U.S., Mexico and Canada are planning to begin renegotiating the North American Free Trade Agreement, which has been called unfair by President Donald Trump. Created in the early 1990s, the deal fostered the development of a large and complicated North American supply chain, especially between the U.S. and Mexico.
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