Unlock the White House Watch newsletter for free

Your guide to what the 2024 US election means for Washington and the world

Donald Trump sparked a bout of turmoil in financial markets hours after his inauguration as he threatened to hit Mexico and Canada with massive tariffs.

Speaking in the Oval Office late Monday, Trump said he could implement tariffs of 25 percent against the two countries as soon as February 1, repeating earlier threats to hit two of its closest allies. US trading partner with tariffs to retaliate for lax border security and fentanyl. trafficking.

Trump’s renewed warnings sent the Mexican peso sliding 1.1 percent against the U.S. dollar, and the Canadian dollar down 0.9 percent as Tuesday’s trading session began in the Asia-Pacific region.

Both currencies gained strength on Monday after administration officials said Trump avoid immediately hitting the key associated with taxes and instead study the state of the trade.

The price swings underscore how investors are bracing for turmoil this week, particularly in currency markets, as Trump unveils plans to unwind several hallmarks of Joe Biden’s policies and make one protectionist agenda which arms America’s economy.

“This kind of volatility is the new normal,” said Eric Winograd, an economist at AllianceBernstein. “Policy under the Trump administration is likely to be less predictable and less process-oriented than what we’re used to under the Biden administration.”

A broad sell-off in the greenback also eased after Trump’s comments on tariffs, with the dollar index, a measure of the currency against six peers, cutting a fall of as much as 1.3 percent to 0.7 percentage only.\

Futures tracking the S&P 500 index on Wall Street also shed gains of up to 0.5 percent.

In a sign of how Trump intends to use trade curbs as a key diplomatic tool, the new president on Monday night hit out at the EU, threatening the bloc with tariffs if it doesn’t. will buy more US oil.

“They’re not going to take our cars, they’re not going to take our farm produce, they’re not going to take anything,” Trump said. “And yet, we take their cars and we take their farm produce, we take a lot from them. So we will know that with any tariffs or they will have to buy our oil. “

The euro, which has the largest weight in the dollar index, fell about 0.5 percent against the greenback to $1.04 in early Asia-Pacific session on Tuesday, partially reversing a one percent gain on Monday.

Sterling fell 0.4 percent to $1.23 after a 0.8 percent increase the previous day.

In Asian markets, traders were relieved after Trump held off on immediate trade curbs against China, although he warned he could do so if Beijing refuses to give the US partial control of social media. TikTok app.

The CSI 300 index of mainland-listed companies opened up 0.5 percent, while Hong Kong’s Hang Seng rose 1 percent. The offshore renminbi also strengthened to a six-week high of 7.25 to the dollar.

“The short version is that we can avoid the worst case scenario from an asset risk perspective. There will be no one-day tariffs on China,” said Jason Lui, head of Apac equity. and derivative strategy of BNP Paribas.

“The Chinese equity market (already) rallied on the inauguration after the Trump-Xi phone call over the weekend, so there was a more measured reaction.”

Reporting by Adam Samson and Harriet Clarfelt in New York, Aime Williams in Washington, Arjun Neil Alim in Hong Kong, Leo Lewis in Tokyo and Nic Fildes in Sydney