Trump's tariff shockwave: Trade tensions with key allies
Donald Trump confirmed that his first economic action after the January inauguration will be 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," says Kieran Calder, an analyst at Union Bancaire Privee.
11:03 AM EST, November 26, 2024
Investors are closely examining the actions of President-elect Donald Trump, who has confirmed that his initial economic decisions will involve raising tariffs on imports from China, Canada, and Mexico once he takes office.
In a post on Truth Social, Trump announced a 10% tariff increase that will be added to existing tariffs and additional tariffs that may be imposed on "all products coming from China to the United States."
Trump aims to impose a 25% tariff on Mexico and Canada for "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 the influx of migrants into the United States. Raising tariffs is a key component 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, says Kieran Calder, head of equity research for Asia at Union Bancaire Privee.
Carol Kong, a strategist at the Commonwealth Bank of Australia, notes that Trump's threats of even higher tariffs are expected to strengthen the American dollar further.
Following Trump's remarks, the Canadian dollar weakened, losing 0.8% against the American dollar in the morning. The Mexican peso also saw a decline, losing over 1.3%. The yuan remains stable, shedding only 0.25% against the dollar. Europe is experiencing slight effects, with declines in futures contracts and a weakening euro, though these moves 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 sources reported progress in negotiations for a ceasefire in Lebanon on Monday.
According to reports, both Israel and Lebanon have agreed to the American proposal, and there is a 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 organization has been regularly shelling Israel since the outbreak of the war in the Gaza Strip in the fall of 2023. The Israeli armed forces earlier reported killing over 2,000 Hezbollah fighters and destroying a significant portion of the Shiite organization's military capabilities.
