US President Donald Trump has said he will move to impose tariffs on Canada and Mexico next month and tighten rules on Chinese investment in the US. Market sentiment deteriorated as risk-off prevailed.
Speaking at a White House press conference, President Trump said the delayed tariffs on Canada and Mexico will continue next month. The pledge came Monday after he signed a memorandum telling a government committee to curb Chinese spending in technology, energy and other strategic U.S. sectors. Both actions risk escalating a potential global trade war, weighing on global market sentiment.
Trump will proceed to impose tariffs on Canada and Mexico
"Customs are proceeding on time, on schedule," Trump told reporters when asked if he would continue the deferred tariffs on Canada and Mexico. Trump originally announced a plan to impose 25% tariffs on Canada and Mexico and 10% levies on Canadian oil earlier this month, which were due to take effect on February 4. He then postponed it for a month after the two countries agreed to tighten their borders to stop illegal migrants and drug trafficking, particularly fentanyl. Shortly thereafter, he announced a plan to impose a 25% import tariff on steel and aluminium, followed by an executive order to investigate reciprocal tariffs against all trading partners, both measures potentially coming into force in April. As mentioned, Canada and Mexico will face composite tariffs, which will have a significant economic impact on both countries.
The expanding trade war between the US and China
Along with the announcement of tariffs on Mexico and Canada this month, it also imposed across-the-board 10% tariffs on Chinese goods, which has encouraged retaliatory measures by the Chinese government. Over the weekend, he proposed fees on the use of Chinese-made merchant ships to curb the country's dominance in vessel production.
Last Friday, he signed a memorandum authorizing the Committee on Foreign Investment to restrict Chinese investment in the US. The order states that China "uses our capital and ingenuity to fund and modernize its military, intelligence, and security operations, posing a direct threat to the security of the United States." US to introduce new rules "to limit the use of its capital, technology, and expertise by foreign adversaries such as China to ensure that only investments that serve U.S. interests are allowed." In response, China's Ministry of Commerce said in a statement that the new rules are "very unreasonable" a "will further erode bilateral investment, which will benefit neither the US nor China". It added that China urges the US to "stop politicising and weaponising economic and trade issues", and warned that "shall take the necessary measures to protect its legitimate rights and interests".
Stock markets fall, USD strengthens, gold reaches new high
Investment sentiment deteriorated in the wake of Trump's expanded tariff and trade threats, and global stock markets mostly fell on Monday. Three U.S. benchmarks including the Dow Jones Industrial Average, S&P 500 and Nasdaq extended a three-day losing streak.
China's stock markets retreated from a month-long rally, with the Hang Seng Index falling from its highest level since February 2022. The index opened sharply lower before bouncing off the lows on Tuesday. By contrast, Germany's DAX was the standout performer, ending higher on optimism over the election results. However, ripple effects from global markets are likely to have an impact on this benchmark as party negotiations to form a new government loom.
In currencies, the US dollar strengthened from a two-and-a-half-month low on the back of risk-off sentiment. The Canadian dollar, Mexican peso and Chinese yuan weakened against the greenback. The euro retreated from an intraday high and ended unchanged against the dollar.
Gold reached a new high due to increased demand for havens in the context of economic uncertainty. However, a stronger US dollar may limit its upward momentum, while an overbought signal is likely to lead to a technical correction in the precious metal.
euronews/ gnews.cz - RoZ
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