“Dollar Surges, Peso & Loonie Dip Amid Trump Tariff Threat”

The US dollar surged after President-elect Donald Trump renewed tariff threats against China, Mexico, and Canada, causing turmoil in global markets. Trump proposed an additional 10% tariff on Chinese goods and a 25% tariff on imports from Mexico and Canada, leading to sharp declines in the Mexican peso and Canadian dollar (loonie), both falling around 1%.

The dollar gained strength as a safe-haven asset, with Bloomberg’s dollar gauge climbing 0.3%. Meanwhile, the offshore yuan fell to a four-month low following Trump’s comments. His social media posts signaled that his campaign promises on trade policies might soon become reality, shaking investor confidence.

“Risk sentiment is getting crushed” due to these tariff threats, said Mingze Wu, a currency trader at StoneX Financial. Currencies of nations affected by Trump’s policies, like the peso, are under heavy pressure.

Trump also criticized China for failing to enforce the death penalty for fentanyl traffickers, blaming both China and Mexico for the surge in drug trafficking into the US. His comments have reminded investors of the volatility caused by his social media posts, which often triggered market swings during his first term.

Market Impact:
Treasury yields rose slightly to 4.28%, while traders took cautious positions on currencies tied to the US, dismantling bullish bets on the Mexican peso and turning bearish on the Canadian dollar.

Experts believe that even with Scott Bessent, Trump’s Treasury pick, attempting to manage deficits, the president-elect’s policies will likely dominate market movements.
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