The Canadian dollar extended its recovery from a 4-1/2 year low against its U.S. counterpart on Wednesday as investors bet on Canada avoiding threatened U.S. trade tariffs through negotiation and looked ahead to domestic GDP data.

A government official says Canada is already examining possible retaliatory tariffs on certain items from the United States should President-elect Donald Trump follow through on his threat to impose s

If they are imposed, the tariffs will hurt American consumers most of all. The North American supply chain is integrated; nearly $1trn-worth of goods crossed the northern and southern borders of the United States last year.

The Canadian dollar clawed back some of its decline against its U.S. counterpart on Tuesday as investors weighed the likelihood of hefty trade tariffs pledged by U.S. President-elect Donald Trump on Canadian products being implemented.

Canadian officials on Tuesday blasted President-elect Donald's Trump's threat to impose sweeping tariffs, as the leader of the country's most populous province called Trump's comparison of Canada to Mexico “the most insulting thing I’ve ever heard.

Markets expect the Fed would need to keep rates higher to counter inflation that could be caused if Trump follows through on his threat.

Trump said in a post on Truth Social that on his first day in office he would impose a 25% tariff on all products from Mexico and Canada, and an additional 10% tariff on goods from China, citing concerns over illegal immigration and the trade of illicit drugs.

Fox News National Correspondent Bryan Llenas and Former Speaker of the House Kevin McCarthy join ‘America’s Newsroom’ to discuss President-elect Donald Trump’s vow to add tariffs on imports from Mexico,