Trump's tariff threat shakes markets; Canadian dollar dips
Donald Trump confirmed that his first economic actions following the January inauguration will be to raise tariffs on products from China, Canada, and Mexico. The market has already reacted.
Donald Trump stated that one of his initial decisions would be to impose a 25% tariff on all products from Mexico and Canada. Additionally, Trump aims to impose an additional 10% tariff on all products from China, in addition to the tariffs that are currently in place or will be applied later.
Trump threatens new tariffs, causing market reactions
"In response, we observe a noticeable weakening of the Canadian dollar, which has decreased by 0.8% against the US dollar this morning. The USDCAD rate rose today to its highest level since May 2020. Meanwhile, the Mexican peso is down over 1.3%, and the USDMXN pair is testing recent local highs from November 5, the US election day. These peaks are the highest since 2022. The yuan remains stable, losing only 0.25% against the dollar, and the USDCNH pair is testing the highest levels since July of this year," stated Michał Stajniak, Deputy Director of Analysis at XTB.
"Europe is slightly caught in the crossfire, with observed declines in futures contracts and a weakening euro. However, these are not significant movements," adds the analyst.
The president-elect added that tariffs will remain in effect until the countries stop the supply of drugs, particularly fentanyl, and "the invasion of illegal aliens" into the United States.
American law provides the president with the necessary tools to enforce tariffs through executive orders, which Donald Trump had the opportunity to use several times during his first term when he imposed them on Chinese and European steel and aluminum.
