Dollar Soars as Trump Threatens Tariffs, Peso and Loonie Fall
The Mexican peso and Canadian dollar plummeted on Tuesday against the U.S. dollar after President-elect Donald Trump announced his intention to impose tariffs on products from Mexico and Canada. Trump cited concerns over illegal immigration and the trade of illicit drugs as the reason for the tariffs.
The President-elect said in a statement that he had held numerous talks with Chinese officials to curb the supply of drugs, particularly fentanyl, to the U.S. but claimed that such talks had not yielded any results. Trump stated that drugs are still pouring into the country, mostly through Mexico, at levels never seen before.
As a result, the Mexican peso’s pair rose 1.8% to its highest level since early November, while the Canadian dollar’s pair jumped over 1% to its highest since May 2020.
In China, the offshore yuan pair rose 0.3% on Tuesday after Trump threatened to impose an up to 60% tariff on all Chinese goods. The move has the potential to spark a renewed trade war between the world’s biggest economies.
The U.S. dollar was also higher in Asian trade, rising 0.5% against a basket of currencies. The decision to impose tariffs is part of Trump’s campaign pledge to impose a 10% uniform import tariff rate on all trading partners of the United States.
