FXTRADING Financial Focus (Asia-Pacific 02/13)US Congress and White House tensions escalate

The US Congress has recently shown rare divisions over tariffs. In a House vote, lawmakers passed a resolution to terminate the national emergency, which had previously served as the legal basis for President Trumps tariffs on Canadian goods. The outcome was symbolically significant, as several Republican members broke ranks to support the opposition despite the party holding a majority.

This vote was not merely procedural. It also reflects declining patience within the Republican Party toward an aggressive tariff approach. With the midterm elections approaching, some lawmakers are becoming more cautious in assessing the real impact of tariffs on voters living costs and local economic conditions. For them, unconditional support for a hardline trade stance could carry tangible political risks at the district level.

Despite this, the White House has shown no sign of compromise. Trump quickly issued a firm response on social media, warning that any Republican backing anti-tariff efforts could face consequences in future primary elections. He continues to stress that tariffs are a critical tool for protecting US economic and national security and should not be weakened by internal divisions.

From a public opinion perspective, the political pressure is not unfounded. Recent polls show that a majority of US adults do not support continued tariff increases. Opposition is not limited to Democratic voters but is also present among a significant share of Republican supporters. This shift suggests that the tariff debate is moving away from ideology toward more practical concerns about living costs and inflation.

Canada, as a direct recipient of the impact, has already begun to feel the spillover effects. Over the past year, consumer boycotts of US goods have emerged domestically, while the government has been actively pursuing trade diversification to reduce reliance on a single market. Although these adjustments are unlikely to deliver immediate results, they have already introduced structural changes to bilateral relations.

Within Congress, opposition momentum continues to build. Democratic lawmakers plan to push for additional votes in the future, potentially extending beyond Canada to other countries subject to US tariffs. At the same time, legal challenges surrounding presidential tariff authority have reached the Supreme Court. The core issue is whether the president can invoke emergency economic powers to impose large-scale tariffs without congressional approval.

From the FXTRADING perspective, the implications of this development extend beyond political maneuvering and are likely to feed into financial markets through policy uncertainty and shifts in risk sentiment. If the legal basis for tariffs is constrained, the North American trade environment could improve at the margin, providing support for the Canadian dollar and related assets. Conversely, if political and legal tensions persist, demand for US dollar assets and safe-haven positioning is likely to remain highly sensitive.