Donald Trump’s tariff plans targeting Canada, Mexico, and China sent shockwaves through global markets.
The Canadian dollar tumbled to a four-year low against the US dollar, while the Mexican peso weakened to its lowest level since 2022. The announcement, made via a post on Trump’s Truth Social platform, detailed his intention to impose 25% tariffs on all goods from Canada and Mexico upon taking office, citing concerns over illegal immigration and the flow of illicit drugs.
Asian markets also declined after Trump revealed plans for an additional 10% tariff on Chinese imports, criticizing China for failing to enforce the death penalty for drug dealers, specifically mentioning fentanyl, which reportedly caused 75,000 deaths in the U.S. last year.
Sean Callow, senior FX analyst at ITC Markets, commented: “Last month, Trump said, ‘the most beautiful word in the dictionary is tariff,’ so the intention wasn’t surprising, only the timing.” He added that the fall in trade-sensitive currencies was logical and likely to persist in the short term.
In Asian trading, Japan’s Nikkei slid 0.9%, with exporters like Toyota and Nissan dropping 1% and 3.6%, respectively. Australia’s benchmark index dipped 0.7% after hitting a record high the previous day, and Taiwan’s market fell 1%. Meanwhile, Hong Kong’s Hang Seng remained flat, while mainland Chinese blue-chip stocks slipped 0.2% after alternating between minor gains and losses.
Gary Ng, senior economist at Natixis, remarked: “This announcement is certainly a shock to the market, particularly for Chinese export-related assets. However, the impact of the Chinese tariff is relatively smaller compared to Canada and Mexico, so investors may wait to see whether the promised 60% tariff escalation materializes.”
