Donald Trump has kicked off his long feared plan for new tariffs sending shockwaves through the markets.
The US dollar rose and shares dipped after Trump said he will impose additional tariffs on products coming into the US from China, Mexico and Canada.
Posting on his social media site Truth Social, Trump said that when he becomes president on 20 January he will “sign all necessary documents to charge Mexico and Canada a 25% tariff on all products coming into the United States, and its ridiculous Open Borders.”
The levy on products from Mexico and Canada – and 10% on Chinese imports – saw the dollar rise more almost 2% against the Mexican peso and hit a four-and-a-half-year high against the Canadian dollar.
The US currency also rose to its highest level since July against China’s yuan as markets reacted to Trump’s comments.
Most Asian equities declined with share benchmarks in Japan, Australia and South Korea all dropping.
The news on tariffs reversed a 0.6% fall in the dollar index on Monday, following Trump’s nomination of hedge fund manager Scott Bessent as Treasury secretary, an appointment investors took as a sign that the president-elect’s policies may be moderated.
Stephen Innes, a managing partner at SPI Asset Management, said:In a striking return to hardline policies, Trump has dramatically escalated tensions with a brash promise to impose a sweeping 25% tariff on all imports from Canada and Mexico the moment he reassumes office. This bold declaration shatters any lingering hopes that the new Treasury secretary, Scott Bessent, might usher in an era of moderation. Initially hailed as a beacon of stability, Bessent’s influence now seems overshadowed by a resurgence of Trump’s uncompromising “America First” doctrine, which starkly excludes even the closest of allies from its protective embrace. The agenda • 9am: FCA to release consumer research on crypto assets, and its crypto ‘roadmap’ • 10am: The EFRA committee will hold an evidence session to scrutinise the work of Ofwat • 11.15am: UK Treasury minister expected to speak at TheCityUK National Conference in Birmingham • 2:30pm: Business and trade select committee session with UK business secretary Jonathan Reynolds
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