The Canadian dollar recouped much of its earlier decline against the greenback on Tuesday as investors assessed the chances of U.S. President Donald Trump carrying out a threat to impose a hefty tax on imports from Canada next month.

The Canadian dollar strengthened to a near 5-week high against its U.S. counterpart on Monday as the prospect of U.S. trade tariffs grew less imminent and a Bank of Canada survey showed that firms are beginning to anticipate improved activity.

Trump was quoted saying his team was thinking of tariffs around 25% which could be announced on Feb. 1 but offered no other specifics.

If the Donald Trump team goes ahead with its 25% tariff on Canada, the hit to local real GDP would be -2% and the job loss would top 400,000. The result — an unemployment rate jumping an additional percentage point to nearly 8%, a level hit in each of the past six recessions.

The dollar drifted slightly lower on Wednesday in indecisive trading as a lack of clarity on President Donald Trump's plans for tariffs kept financial markets guessing. Trump said late Tuesday at the White House that his administration was discussing imposing a 10% tariff on goods imported from China on Feb.