Trump's tariffs stir market turmoil; currencies in flux
Donald Trump has confirmed that his initial economic decisions following the January inauguration will involve raising tariffs on products from China, Canada, and Mexico. The market has already begun to react.
Trump has indicated that one of his first actions will be to impose a 25% tariff on all products arriving from Mexico and Canada. Additionally, he intends to impose an extra 10% tariff on all products from China, in addition to any existing or future tariffs.
Trump threatens with new tariffs. The market reacts
"In response, we observe a noticeable weakening of the Canadian dollar, which has dropped 0.8% against the US dollar this morning. The USDCAD has risen to its highest levels since May 2020. The Mexican peso, meanwhile, has fallen over 1.3%, with the USDMXN pair testing recent local highs from 5 November, the day of the US elections. These highs are the highest since 2022. The yuan remains stable, losing only 0.25% against the dollar as the USDCNH pair tests the highest levels since July this year," says Michał Stajniak, deputy director of the XTB analysis department.
"Europe took a slight hit, as we observe declines in futures contracts and a weakening euro. However, these movements are not significant," adds the analyst.
The president-elect has also stated that the tariffs will remain in place until countries address drug shipments, particularly fentanyl, and the "invasion of illegal aliens" into the United States ceases.
American law gives the president the authority to impose tariffs through decrees, a power Donald Trump exercised multiple times during his first term when he imposed them on Chinese and European steel and aluminium.
