Dollar surges

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TOKYO/SINGAPORE- The dollar surged on Monday, pushing its Canadian counterpart and Mexican peso to multi-year lows while China’s yuan slumped to a record trough in offshore trade after US President Donald Trump’s sweeping tariffs kicked off a trade war.

The US dollar’s gains were broad, with the euro also dropping to a more than two-year low and the Swiss franc – despite typically acting as a safe haven – sliding to the weakest since May.

Canada and Mexico, the top two US trading partners, immediately vowed retaliatory measures, and China said it would challenge Trump’s levies at the World Trade Organization.

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“The surprise for markets … is that Canada and Mexico retaliated immediately and that others, i.e. China and the EU, may follow their lead, resulting in a sharp contraction in global trade,” said Tony Sycamore, a market analyst at IG.

“The starting date of US tariffs on Canada, Mexico and China of Feb. 4 was also much sooner than many had anticipated.”

As Trump had promised last month, the United States hit Canada and Mexico with duties of 25 percent and China with a 10 percent levy, calling the measures necessary to combat illegal immigration and the drug trade.

“Trump’s early strike, just two weeks into his four-year term, is likely to hit investor confidence,” said Mansoor Mohi-uddin, chief economist at Bank of Singapore.

“The consensus – including ourselves – had expected US tariffs would only threaten the economic outlook in the second half of 2025 after lengthy negotiations first between the US and its main trading partners.” 

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