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 won a slight reprieve on Monday after Donald Trump did not immediately impose tariffs on imports from Canada on his first day in office. The loonie was up 1.25 per cent to 69.86 cents U.

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

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.