Introduction: Dollar gains and stocks drop on Trump tariff threats
Good morning, and welcome to our coverage of business, the financial markets and the world economy.
Donald Trump has kicked-off his long feared plan for new tariffs sending shockwaves through the markets.
The US dollar rose and shares dipped after Donald Trump said he will impose additional tariffs on products coming into the US from China, Mexico and Canada.
Posting on his social media site Truth Social, Trump said that when he becomes president on January 20th he will “sign all necessary documents to charge Mexico and Canada a 25% Tariff on ALL products coming into the United States, and its ridiculous Open Borders.”
The levy on products from Mexico and Canada – and 10% on Chinese imports – saw the dollar rise almost 2% against the Mexican peso and hit a four and a half year high against the Canadian dollar.
The US currency also rose to its highest level since July against China’s yuan as markets reacted to Trump’s comments.
Most Asian equities declined with share benchmarks in Japan, Australia and South Korea all dropping.
The news on tariffs reversed a 0.6% fall in the dollar index on Monday, following Trump’s nomination of hedge fund manager Scott Bessent as Treasury secretary, an appointment investors took as a sign that the president-elect’s policies may be moderated.
Stephen Innes, managing partner, SPI Asset Manager, said:
In a striking return to hardline policies, President-elect Trump has dramatically escalated tensions with a brash promise to impose a sweeping 25% tariff on all imports from Canada and Mexico the moment he reassumes office. This bold declaration shatters any lingering hopes that the new Treasury Secretary, Scott Bessent, might usher in an era of moderation. Initially hailed as a beacon of stability, Bessent’s influence now seems overshadowed by a resurgence of Trump’s uncompromising “America First” doctrine, which starkly excludes even the closest of allies from its protective embrace.
The agenda
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9am: FCA to release consumer research on crypto assets, and its crypto ‘roadmap’
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10.00am: The EFRA Committee will hold an evidence session to scrutinise the work of Ofwat
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11.15am: UK Treasury minister expected to speak at TheCityUK National Conference in Birmingham
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2:30pm: Business and Trade select committee session with UK business secretary Jonathan Reynolds
Key events
Fears of a potential global trade war has fuelled a sell-off of European automotive stocks.
Shares in Stellantis, the owner of brands including Fiat, Chrysler, Peugeot and Vauxhall, have been hit the hardest falling almost 6% in early trading.
Germany’s Volkswagen fell 2.7%, Mercedes-Benz tumbled 2.2%, BMW dropped 2.4%, and luxury brand Porsche fell 2.3%.
European stocks fall amid Trump tariff fears
European stock markets have fallen at the start of trading as investors worry about the ramifications of Trump’s international tariff threats, with the pan-European STOXX 600 index down 0.5%.
The FTSE 100 index of blue-chip stocks in London fell by 0.3% in early trading, while Germany’s DAX fell 0.5%. In France, the CAC 40 share index dropped 0.8%
Chris Turner, global head of markets at ING, published a note saying that Europe will not be “breathing a sigh of relief” despite not being targeted by Trump in his first round of tariffs.
That Europe was not mentioned in Trump’s first tariff post could perhaps be welcome news on the continent.
Yet local policymakers will remain fearful that it will just be a matter of time before Trump turns his attention to the European auto sector or tariffs more broadly. In any case, the threat of further tariffs on China shows the direction of travel on world trade, which is bearish for the euro.]
Copper prices have fallen, weighed down by a stronger US dollar and US President-elect Donald Trump’s pledge to levy more tariffs on Chinese products.
Three-month copper on the London Metal Exchange (LME) was down 0.6% at $8,990.50 per metric ton by 7am, while the most-traded January copper contract on the Shanghai Futures Exchange (SHFE) closed down 0.3% to 73,740 yuan ($10,162.48) a ton, Reuters reported.
Investor Bill Ackman said that markets should be up as Trump is usinng the threat of tariffs as a weapon to achieve wider US economic goals.
“To be clear, according to Trump the 25% tariffs will not be implemented, or if implemented will be removed, once Mexico and Canada stop the flow of illegal immigrants and fentanyl into the U.S,” he posted on X. “In other words, @realDonaldTrump is going to use tariffs as a weapon to achieve economic and political outcomes which are in the best interest of America, fulfilling his America first policy. This is a great way for Trump to effect foreign policy changes even before he takes office.”
Introduction: Dollar gains and stocks drop on Trump tariff threats
Good morning, and welcome to our coverage of business, the financial markets and the world economy.
Donald Trump has kicked-off his long feared plan for new tariffs sending shockwaves through the markets.
The US dollar rose and shares dipped after Donald Trump said he will impose additional tariffs on products coming into the US from China, Mexico and Canada.
Posting on his social media site Truth Social, Trump said that when he becomes president on January 20th he will “sign all necessary documents to charge Mexico and Canada a 25% Tariff on ALL products coming into the United States, and its ridiculous Open Borders.”
The levy on products from Mexico and Canada – and 10% on Chinese imports – saw the dollar rise almost 2% against the Mexican peso and hit a four and a half year high against the Canadian dollar.
The US currency also rose to its highest level since July against China’s yuan as markets reacted to Trump’s comments.
Most Asian equities declined with share benchmarks in Japan, Australia and South Korea all dropping.
The news on tariffs reversed a 0.6% fall in the dollar index on Monday, following Trump’s nomination of hedge fund manager Scott Bessent as Treasury secretary, an appointment investors took as a sign that the president-elect’s policies may be moderated.
Stephen Innes, managing partner, SPI Asset Manager, said:
In a striking return to hardline policies, President-elect Trump has dramatically escalated tensions with a brash promise to impose a sweeping 25% tariff on all imports from Canada and Mexico the moment he reassumes office. This bold declaration shatters any lingering hopes that the new Treasury Secretary, Scott Bessent, might usher in an era of moderation. Initially hailed as a beacon of stability, Bessent’s influence now seems overshadowed by a resurgence of Trump’s uncompromising “America First” doctrine, which starkly excludes even the closest of allies from its protective embrace.
The agenda
-
9am: FCA to release consumer research on crypto assets, and its crypto ‘roadmap’
-
10.00am: The EFRA Committee will hold an evidence session to scrutinise the work of Ofwat
-
11.15am: UK Treasury minister expected to speak at TheCityUK National Conference in Birmingham
-
2:30pm: Business and Trade select committee session with UK business secretary Jonathan Reynolds
