In an announcement on social media, President-elect Donald Trump declared plans to impose substantial tariffs on goods from Mexico, Canada, and China starting from his first day in office. He indicated that a 25% tariff would be applied to all imports from Mexico and Canada, along with a 10% tariff on products coming from China.
Trump’s rationale behind these tariffs stems from concerns over drug trafficking and border security. He criticized China for not taking sufficient measures to curb the flow of illegal drugs entering the United States from Mexico. He contended that the tariffs would remain in place until there is significant action from China to address these issues with border control.
The market responded immediately to Trump’s statements. The US Dollar gained upward momentum against other major currencies, marking a notable increase as it approached the 107.50 level. This development illustrates the market’s reaction to anticipated shifts in trade policy and international relations influenced by the new administration.
On the contrary, the Australian Dollar, often viewed as a proxy for Chinese economic activity due to trade links, experienced a decline against multiple currencies. This drop reflects broader market concerns regarding potential trade tensions and their impact on the economy. The AUD/USD pair was recorded at 0.6465, reflecting a day-over-day decrease of 0.51%, indicating a bearish sentiment among investors regarding the economic outlook associated with these tariff proposals.
Overall, Trump’s firm stance on trade policy is poised to create ripples in the market and set the stage for changing dynamics in international trade relations as he prepares to take office.
