Trump’s tariffs propel U.S. dollar to new highs; global currencies plummet

Trump’s tariffs propel U.S. dollar to new highs; global currencies plummet

Summary

✔ Trump delivers on promise of tariffs on Mexico, Canada and China

✔ Trump slaps 25% tariffs on Canada, Mexico; 10% levy on China

✔ Asian stocks, U.S. and European futures drop as Canada, Mexico retaliate

✔ US dollar hits record high vs yuan

✔ Mexican peso, Canadian dollar tumble

✔ Hang Seng drops 1% on return from holiday; mainland markets shut

REUTERS

The U.S. dollar surged on Monday after President Donald Trump imposed sweeping tariffs, initiating a trade war. This led to significant declines in the Canadian dollar, Mexican peso, and China’s yuan, which hit a record low in offshore trading. Canada’s and Mexico’s immediate retaliations, along with potential EU and China responses, are causing concerns about a global trade contraction.

The tariffs, effective February 4, are earlier than anticipated and aim to address illegal immigration and the drug trade. The U.S. dollar’s rise also affected the euro, Swiss franc, sterling, and Japanese yen. The Federal Reserve’s rate cut expectations were adjusted, and the trade tensions could lead to stagflation, weak growth with higher inflation. Financial markets saw the U.S. dollar index remain firm and cryptocurrencies like Bitcoin and Ether decline sharply.

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Stocks slump, dollar soars as Trump tariffs trigger trade war fears

Asian stock markets slumped on Monday and European and U.S. equity futures pointed sharply lower after President Donald Trump’s tariffs on Canada, Mexico and China triggered fears of a broad trade war and a hit to global growth.

The U.S. dollar shot to a record peak against the Chinese yuan in offshore trading, its highest against Canada’s currency since 2003 and the strongest against the Mexican peso since 2022.

Japan’s Nikkei share average (.N225), opens new tab tumbled 2.9% and Australia’s benchmark (.AXJO), opens new tab – often a proxy trade for Chinese markets – dropped 1.8%.

Stocks in Hong Kong, which include listings of Chinese companies, fell 1.1% upon reopening from Lunar New Year holidays. Mainland Chinese markets resume trading following the holidays on Wednesday.

Pan-European STOXX 50 futures sank 2.7%, and U.S. S&P 500 futures dropped 2%.

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Trump's tariffs propel U.S. dollar to new highs; global currencies plummet

 

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