By Wayne Cole

SYDNEY (Reuters) – The dollar returned to strong trading in Asia on Tuesday after U.S. President Donald Trump suggested the United States could impose tariffs on Canada and Mexico in the near future, although details were lacking.

Trump was quoted as saying his team was considering tariffs around 25% that could be announced on February 1, but offered no other details.

The comments came as a surprise given that officials had earlier announced any new taxes would be imposed in a “measured” manner, a big relief for trade-exposed ones. money The following memo only directs agencies to investigate and correct ongoing trade deficits.

The 25% tariff “looks high as a starter, and the markets reacted quickly, especially in FX”, said Shoki Omori, chief global desk strategist at Mizuho (NYSE:) Securities in Tokyo.

“I think market participants think that Trump will start with China, with a 10-20% tariff on goods but a gradual increase.”

The market reaction was a knee-jerk fall in the Canadian dollar and Mexican peso, which helped the dollar pare losses suffered on Monday. The dollar rose 1.2% to 1.4475 Canadian dollar, while the peso gained 1.3%.

It bounced 0.6% to 108.65, shedding 1.2% overnight in what was its sharpest daily loss since late 2023.

The euro fell back to $1.0364, from an earlier top of $1.0434. The EU runs a large trade surplus with the United States and is seen as a major target for Trump’s tariffs.

The dollar recovered 0.3% against the Japanese yen to 156.06, after earlier touching a five-week trough at 154.90.

The yen made gains last week on growing expectations that the Bank of Japan will raise rates at its policy meeting on Friday.

The dollar also added 0.3% to 7.2847. Trump has previously threatened China with tariffs of up to 60%.