First announcement of the trade war between Donald Trump and the rest of the world. The president-elect announced via his social network Truth Social that he would impose Rates 25% to imports of “all” products from Canada and Mexico, and will increase those of China by 10% until these three countries apply a more aggressive policy against drug trafficking and immigration that reaches the United States.
The New Yorker makes the decision to impose 25% tariffs because, it says, of the “ridiculously open borders” of Canada and Mexico and the “crime and drugs” crossing their borders into the United States. United. Especially, the president-elect pointed the finger at fentanyl. “We demand that you use this power and until you do, you will have to pay a very high price!” Trump said.
In another message, the Republican announced that will increase by 10% the tariffs that Chinese imports already apply until Beijing blocked drug trafficking to the United States. “Drugs are entering our country, particularly through Mexico, at levels never seen before,” he said.
Dollar scales
Trump assured that the tariffs would remain in effect until the countries concerned control both the flow of drugs and that of immigrants. After the message, the Prime Minister of Canada, Justin Trudeaucalled the president-elect and pointed out that “the number of migrants crossing the Canadian border is tiny compared to Mexico,” according to Bloomberg.
The spokesperson for the Chinese Embassy in the United States, Liu Pengyusaid no one “will win in a trade or tariff war” and insisted that China has worked with U.S. authorities to stop trafficking in fentanyl components (known as “precursors”).
Markets reacted voraciously to Trump’s announcement in the appreciation of the dollar against the currencies concerned by around 0.8%. The US dollar is currently trading:
- In front Canadian dollar: One US dollar is currently trading at 1.41 Canadian dollars after trading at 1.39 yesterday.
- In front Mexican peso: One US dollar exchanges for 20.6 Mexican pesos, up from 20.3 yesterday.
- In front Chinese yuan: One dollar is trading at 7.27 yuan, after increasing by 7.25 since yesterday.
The euro is currently appreciating by 0.1% against the American currency and remains at 1.05 euros per dollar.
Compliance with measures
Trump usually throws maximalist messages which shocked public opinion and materialized in subsequent decrees. At this time, beyond the announcement, it is unclear what measures Canada, Mexico and China would have to meet for the United States to decide to eliminate the tariffs. In the case of China, the administration of outgoing President Joe Biden is currently maintaining a myriad of tariffs on different products, ranging from steel products at 25% to batteries at 100%.
This message from Trump, although it has an impact on the markets, is not new: already during the campaign, he announced that he would impose customs duties of 60% on Chinese imports and a duty rate 20% off products from the rest of the world.
