SINGAPORE- The US dollar rose on Tuesday after President-elect Donald Trump said he would impose tariffs on products coming into the United States from Mexico, Canada and China, as investors braced for polices that could set the stage for a trade war.
In an initial knee-jerk reaction to Trump’s comments, the dollar jumped more than 2 percent against the Mexican peso and hit a four-and-a-half-year high against its Canadian counterpart
The US currency also rose to its highest level since July 30 against China’s yuan Other currencies also fell against the dollar but pared loss by mid-afternoon in Asia.
The dollar has been on the back foot over the past couple of days as US Treasury markets cheered Trump’s pick of hedge fund manager Scott Bessent for US Treasury Secretary.
While traders see Bessent as an old Wall Street hand and fiscal conservative, he has favored a strong dollar and supported tariffs. Analysts said market reaction to the choice will likely be short lived.
“The market is going to be twitchy” when it comes to Trump comments, said senior market strategist Jason Wong at BNZ. “You can jump to conclusions but I wouldn’t be jumping to anything at the moment so the market just needs to get a grip.”
Trump said that on his first day in office he would impose a 25 percent tariff on all products from Mexico and Canada.
On China, the president-elect said Beijing was not taking strong enough action to curb the export of ingredients used in illicit drugs. “Until such time as they stop, we will be charging China an additional 10 percent Tariff, above any additional Tariffs, on all of their many products coming into the United States of America,” Trump said.
