MW Mexico's peso and Canada's dollar fall on Trump's 25% tariff threats
By Louis Goss
Mexico's peso and Canada's dollar fell sharply in the early hours of Tuesday morning on the back of a social media post from president-elect Donald Trump outlining plans to impose 25% tariffs on all products imported from the two countries with which the U.S. shares a land border.
In a late night post on his platform Truth Social, Trump vowed to "sign all necessary documents to charge Mexico and Canada a 25% Tariff on ALL products coming into the United States."
In the post at 11:35pm on Monday evening, Trump indicated he plans to keep the 25% tariffs in place until Canada and Mexico take sufficient action to block flows of drugs and "illegal aliens" into the U.S. via their respective land borders.
"Both Mexico and Canada have the absolute right and power to easily solve this long simmering problem. We hereby demand that they use this power, and until such time that they do, it is time for them to pay a very big price!" Trump said
The value of Mexico's peso $(USDMXN.FOREX)$ fell by almost 2% within an hour-and-a-half of Trump's social media post as the value of the Canadian dollar $(USDCAD.FOREX)$ also fell by more than 1% in comparison to the U.S. dollar.
In a separate post on Truth Social $(DJT)$ also at 11:35pm, Trump also outlined plans to impose additional 10% tariffs on products imported into the U.S. from China in response to a perceived lack of action aimed at blocking flows of fentanyl into America via Mexico.
Trump's posts follow his decision to pick hedge fund manager Scott Bessent as his administration's new Treasury Secretary. The Wall Street veteran had previously indicated he would push for a more moderate approach to tariffs.
European markets also experienced sharp drops on Tuesday morning on concerns Trump may soon turn his attention towards Europe in a shift that would likely have a particularly serious impact on the continent's car manufacturers who generate significant sales in the U.S.
Germany's DAX DX:DAX index fell 1% on Tuesday morning as shares in car makers including Daimler Truck Holding (XE:DTG), Porsche (XE:P911), Volkswagen (XE:VOW), Bayerische Motoren Werke (BMW) (XE:BMW), and Mercedes-Benz Group (XE:MBG) all fell.
"The President-elect's scorched-earth approach has stoked fears of a trade war, with investors increasingly wary that Europe could be next in his crosshairs," Matt Britzman, senior equity analyst at Hargreaves Lansdown, said.
-Louis Goss
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(END) Dow Jones Newswires
November 26, 2024 05:56 ET (10:56 GMT)
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