Trump's tariffs on Canada, Mexico and China: Fears of a global trade war shake markets!
Global markets were in turmoil in Asia on Monday as investors feared a global trade war. U.S. President Donald Trump signed an executive order on Saturday to move forward with promised tariffs on Canada, Mexico and China. In response, the three countries warned of retaliatory measures.
The White House will formally impose a 25% tariff on goods from Canada and Mexico, and a 10% tariff on Chinese imports, starting Tuesday. However, Canadian energy imports will face a lower 10% tariff to prevent a devastating impact on U.S. gasoline and shale oil prices at home. Trump added that retaliation from those countries could result in an increase or expansion of their export tariffs.
Euro plunges as markets face turbulence
Global markets were in for a volatile session in Asian trading on Monday. The US dollar rose, while currencies exposed to potential US tariffs fell. The Canadian dollar fell against the US dollar to its lowest level in more than two decades, and the Mexican peso-USD pair fell to a four-year low.
The euro fell more than 1% against the dollar to its lowest level in more than two years, only briefly touching mid-January levels. Other commodity currencies, including the Australian dollar and New Zealand dollar, also saw sharp declines of 2% against the greenback, falling to multi-year lows.
In commodities, crude oil prices rose 4% before a pullback due to a lower tariff on Canadian energy imports. However, metals prices, including gold, silver and copper, were all lower on a strong dollar. Cryptocurrencies were also hit hard amid prevailing risk sentiment. Bitcoin fell to just above $94,000 (€92,000) at 4:30 a.m. ECT from $101,000 (€99,000) over the weekend.
Asian stock markets were mostly lower on Monday, while U.S. and European futures fell sharply. Sectors exposed to U.S. tariffs could face the strongest headwinds, especially the auto industry. European carmakers, especially those with Mexican plants, such as BMW, could experience a volatile session.
Government bond yields, which are usually in line with borrowing costs, could be under pressure in the US and the EU today. While long-term government bonds are often seen as safe havens in times of uncertainty, Trump’s tariffs and the threat of retaliation could intensify global inflationary pressures, potentially disrupting central bank easing cycles.
Canada, Mexico and China towards countermeasures
Canadian Prime Minister Justin Trudeau said the country will impose 25% tariffs on $155 billion worth of U.S. goods, including American alcohol, agricultural products, consumer goods and materials. The tariffs on $30 billion worth of goods will take effect on Tuesday.
However, economists expect Canada could fall into recession as a result of the increased US tariffs and retaliatory measures, which would be the first economic contraction since the pandemic. President Trump said in his tweet that his tariffs are aimed at curbing illegal immigrants and deadly drugs, including fentanyl, by targeting Mexico and China. Both countries did not immediately respond with counter-tariffs, but expressed intentions to retaliate.
Mexican President Claudia Sheinbaum posted on X that the country is working on a “Plan B” that includes tariff and non-tariff measures to protect Mexico’s interests. She added that further details would be announced later on Monday and stressed that the parties should work in a comprehensive manner and according to the principles of shared responsibilities. China’s Ministry of Commerce issued a statement on Sunday, saying that “China is very dissatisfied with this and firmly opposes it.”
A government spokesman said the unilateral tariffs "seriously violate" World Trade Organization (WTO) rules. China plans to file a complaint with the WTO, keeping the door open for negotiations. "China hopes the United States will correct its wrongdoings and work with China to address these issues," the spokesman said.
Poll
Vengu: Military personnel, salary increase from 13,000 to 100,000 lek!
Minister of Defense, Pirro Vengu, today published the figures for the increase in financial treatment for several categories, where more specifically Pilots,......
Trump targets EU and UK in latest tariff threat!
US President Donald Trump has called the European Union's €300 billion trade deficit with the US an "atrocity", adding that tariffs "will definitely happen"......
How has this month started for the major currencies?
The US dollar has registered an increase this morning, starting this week and month at a positive rate, being bought today at 95.5 lek and being sold at 97.2......
Consumers across the Balkans boycott supermarkets to protest price increases!
Shoppers across the Balkans boycotted supermarkets on Friday as part of a movement protesting rising food prices and a worsening cost of living crisis. The......
"25% Tariffs on Canada and Mexico, from February 1st" - Trump announces taxes on neighboring countries, plans measures against China
United States President Donald Trump has announced that 25% tariffs on Canada and Mexico will take effect on February 1. He has also warned of new measures......
Bundestag vote on Merz's second immigration bill postponed amid mass protests in Germany!
A second bill seeking stricter rules on migration in Germany was delayed on Friday after a first proposal passed with votes from the far-right Alternative......
How Italy helped Germany lower energy prices? European grid interconnections provide stability and flexibility
Italy has increased electricity exports to help Germany, which is facing a supply shortage at home. This phenomenon underlines the importance of an......
Rama: Cameras for 200 km of national roads - Surveillance in 20 cities, investment according to agreement with the United Arab Emirates
200 km of national roads and 20 cities with a focus on road traffic will be monitored with cameras, with the aim of identifying violations and violators.......
