Trump to escalate trade tensions with new tariffs on imports
Donald Trump has confirmed that his initial economic actions following the January inauguration include raising tariffs on products from China, Canada, and Mexico. "This is President Trump’s negotiating style: step one, punch in the face, step two, let’s negotiate," evaluates Kieran Calder, an analyst at Union Bancaire Privée.
Investors are considering the moves of President-elect Donald Trump, who has confirmed that his first economic actions after January's inauguration will involve increasing tariffs on products imported from China, Canada, and Mexico.
In a post on Truth Social, Trump announced an increase of a 10% tariff, which will be added to existing tariffs, with additional ones potentially imposed on "all products imported from China to the United States."
Trump aims to impose a 25% tariff on Mexico and Canada on "all products brought into the United States through their absurdly open borders." Trump stated that these tariffs will remain until both countries halt the supply of drugs, particularly fentanyl, and prevent the influx of migrants into the United States. Increasing tariffs is a key feature 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," evaluates 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," says Carol Kong, a Commonwealth Bank of Australia strategist.
In reaction to Trump's statements, the Canadian dollar weakened, losing 0.8% in the morning against the American dollar. The Mexican peso is down over 1.3%. The yuan remains stable, losing only 0.25% against the dollar. Europe is slightly affected, with declines in futures contracts and a weakening euro, but these movements are insignificant.
Will there be a ceasefire? Israel and Lebanon near agreement
Investors are also monitoring reports on progress towards a ceasefire between Israel and Hezbollah. Media outlets reported progress in negotiations for a ceasefire in Lebanon on Monday.
Reports indicate that both Israel and Lebanon have agreed to the American proposal, with the possibility that a truce will be announced in the coming days. Israel has been engaged in conflict with Hezbollah, which controls southern Lebanon, for two months.
The Iran-backed Shiite organisation has been regularly shelling Israel since the conflict in the Gaza Strip erupted in the autumn of 2023. The Israeli armed forces previously reported killing over 2,000 Hezbollah fighters and substantially reducing the military capabilities of the Shiite organisation.
