HomeBusiness'Stop-Go' Trump Tariff Trades Whiplash Dollar

‘Stop-Go’ Trump Tariff Trades Whiplash Dollar

A look at the day ahead in the US and global markets by Mike Dolan

Likely a taste of things to come, stock and currency markets were tossed on the first day of Donald Trump’s new presidency as they second-guessed his trade tariff plans and were largely left in the dark on the issue as the U.S. markets returned from Monday’s holiday. .

Trump’s inauguration was accompanied by dozens of executive orders and directives — ranging from emergency restrictions on immigration at the Mexican border to increased oil drilling, a requirement that government agencies keep inflation in check, U.S. withdrawal from climate accords and pardons for Capitol Hill rioters in 2021.

But there were no specific Day One actions on the long-promised trade tariffs – something already noted on Monday by a Wall Street Journal report that sharply weakened the US dollar and boosted overseas stock markets, which were in the line of fire gave.

But just as that relief set in during the day, leading to one of the biggest declines in the dollar index of the year and rallies in European and Chinese stocks, Trump later responded to questions by saying he was considering tariffs of 25 % on Mexico and China. Canada from February 1, with inaction from both countries blamed for the flows of illegal migrants and fentanyl.

However, he also suggested that his plans for a universal tariff on all US goods imports were not yet in the works. “Maybe so. But we’re not ready for that yet,” Trump said.

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The result was that Monday’s rallies in the Mexican peso and Canadian dollar were almost completely reversed, wiping out half of the euro’s jump. China’s offshore yuan, which had its biggest one-day gain since August on Monday, also gave back almost half of that move.

European shares, which had risen on Monday, were flat earlier today and mainland Chinese shares also stalled after giving up an early gain of almost 1%. However, Hong Kong’s Hang Seng closed 0.9% higher that day.

In a presidential memo, Trump directed the Departments of Commerce and Treasury and the U.S. Trade Representative to examine the economic and national security risks of large trade deficits and “recommend appropriate actions, such as a global additional tariff or other policies, to address such deficits ” .

The memo called on the USTR to assess China’s performance under the “Phase 1” trade deal it signed with Beijing in 2020 to end a nearly two-year tariff war.

For Wall Street stocks returning after Monday’s Martin Luther King holiday and also in the midst of fourth-quarter earnings season, the overall picture appears to remain positive, with index futures up 0.5% before Tuesday’s bell . Netflix will later be at the top of the corporate agenda.

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