Trump's tariff gambit: Pressure mounts on global markets
Donald Trump confirmed that his first economic decisions following the January inauguration will involve raising tariffs on products from China, Canada, and Mexico. "This is President Trump’s negotiating style," observes Kieran Calder, an analyst at Union Bancaire Privée. "Step one, punch in the face, step two, let’s negotiate."
Investors are assessing the actions of President-elect Donald Trump, who confirmed that his first economic actions after the January inauguration will be to raise tariffs on products from China, Canada, and Mexico.
In a post on Truth Social, Trump announced a 10% tariff increase, which will be added to existing tariffs, and additional ones he might impose on "all products coming from China to the United States."
Trump wants to impose a 25% tariff on Mexico and Canada for "all products brought into the United States through their absurdly Open Borders." Trump stated that these tariffs will remain in place until both countries stop the supply of drugs, particularly fentanyl, and the influx of migrants into the United States. Raising tariffs is a key aspect of the future economic policy of the American president.
"This is President Trump’s negotiating style: step one, punch in the face, step two, let’s negotiate," says Kieran Calder, head of equity research for Asia at Union Bancaire Privée.
"Trump's threat of even more tariffs will give another leg up to the US dollar," notes Carol Kong, a Commonwealth Bank of Australia strategist.
Following Trump's remarks, the Canadian dollar weakened, losing 0.8% in the morning against the American dollar. The Mexican peso is also losing value, dropping over 1.3%. The yuan remains steady, losing only 0.25% to the dollar. Europe is slightly affected, with declines in futures contracts and a weakening euro, though these are insignificant changes.
Will there be a ceasefire? Israel and Lebanon near agreement
Investors are also following reports on progress towards a ceasefire between Israel and Hezbollah. Media reported progress in negotiations for a ceasefire in Lebanon on Monday (Eastern Time).
According to reports, both Israel and Lebanon have agreed to the American proposal, and there is a chance that a truce will be announced in the coming days. Israel has been at war with Hezbollah, which controls southern Lebanon, for two months.
The Iran-backed Shiite organization has been regularly shelling Israel since the outbreak of war in the Gaza Strip in the fall of 2023. The Israeli armed forces earlier reported killing over 2,000 Hezbollah fighters and destroying a significant portion of the Shiite organization's military capabilities.
