Traders of Canadian short-term interest rates have begun to price in meaningful odds of an emergency cut by the Bank of Canada to blunt the economic impact of tariffs the United States said will take effect Tuesday.

While a one-month reprieve for Mexico from U.S. tariffs on Monday led to a partial reversal in anticipation Canada also may avoid them, interest-rate swaps linked to the Canadian overnight repo rate average, or CORRA, sustained steep declines. At the same time, Canada’s two-year yield plummeted, reaching levels nearly 180 basis points lower than its U.S. counterpart, the widest margin since 1997.