The U.S. dollar rallied broadly on Monday, exerting pressure on its Canadian and Mexican counterparts and leading the Chinese yuan to reach record lows in offshore trading. This financial volatility emerged in response to U.S. President Donald Trump’s decision to initiate a trade conflict by implementing extensive tariffs.
Significantly, the euro faced a downturn, hitting its weakest point in over two years, while the traditionally stable Swiss franc also declined to its lowest value since May. This downturn underscores market nervousness despite the Swiss currency’s usual status as a haven during economic turbulence.
As the United States moved to enforce tariffs, Canada and Mexico, its top trading partners, immediately announced plans for retaliatory measures. Meanwhile, China announced intentions to contest these tariffs at the World Trade Organization. Trump, echoing promises made the previous month, imposed duties of 25% on Canada and Mexico and a 10% levy on China, citing the necessity of these measures to tackle illegal immigration and drug trafficking challenges.
In anticipation of these tariffs, Canada revealed plans to counteract with 25% levies on an assortment of U.S. imports, as stated by Prime Minister Justin Trudeau. He cautioned that such actions by the U.S. would have tangible repercussions for Americans. Trump further warned that any Canadian retaliation would prompt him to double down on tariffs.
Chinese markets are currently in recess for the Lunar New Year, with trading set to recommence on Wednesday.
