(Bloomberg) — The dollar strengthened and Asian shares dropped after President-elect Donald Trump said the US will impose additional 10% tariffs on Chinese goods and place 25% levies on imports from Mexico and Canada.
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US equity futures also slipped as the comments fueled concern Trump will follow through on the tariffs plans he advocated in his campaign. In posts to his Truth Social network, he claimed China had failed to deliver on promises to crack down on drugs, and the levies on Mexico and Canada were needed to restrict migrants and illegal drugs flowing into the US.
Bloomberg’s Dollar Spot Index surged 0.6%, while China’s offshore yuan fell 0.4% and Mexican peso and Canadian dollar both tumbled more than 1%. Treasuries also slipped, sending yields higher. Share benchmarks in Japan, Australia and South Korea all dropped.
“Risk sentiment is getting crushed for now on Trump’s tariff risks — the dollar is being viewed as a haven and the affected nations’ currencies like the Mexican peso are getting hammered,” said Mingze Wu, currency trader at StoneX Financial. “This may just be a taste of what’s to come.”
Trump’s comments came after US stocks and Treasuries had climbed Monday as traders welcomed the former president’s pick of Scott Bessent for Treasury Secretary, betting the hedge-fund manager will bring a Wall Street mindset to the role. While Bessent has at times suggested that Trump is signaling a maximalist approach as a negotiation tactic, in an op-ed Nov. 15 for Fox News he signaled strong support for tariffs.
Commodity currencies such as the Australian dollar also tumbled. The Aussie slid as much as 0.9%, while New Zealand’s dollar dropped 0.5%.
“Trump’s threat of even more tariffs will give another leg up to the US dollar,” said Carol Kong, a strategist at Commonwealth Bank of Australia in Sydney. “Aussie and kiwi will be dragged down because of their links to the Chinese economy.”
Gold fell as the dollar jumped after Trump threatened import tariffs of 25% on Canada and Mexico.
Oil steadied after a sharp decline in the previous session as Israel said that it had edged closer to a cease-fire agreement with Hezbollah.
Key events this week:
Fed minutes, US new home sales, consumer confidence, Tuesday
US PCE, initial jobless claims, GDP, Wednesday
Eurozone consumer confidence, Thursday
US Thanksgiving holiday. Markets closed, Thursday
Eurozone CPI, Friday
ECB releases consumer expectations survey for October, Friday
“Black Friday,” the traditional start of the US holiday shopping rush
