Trump waved the “tariff stick”! The US dollar soared, the Mexican peso and the Canadian dollar plummeted

The Zhitong Finance App learned that on November 25, local time, US President-elect Trump said he would levy a 25% tariff on all products from Mexico and Canada entering the US, and a 10% tariff on all goods imported from China. Affected by the news, the US dollar index rose sharply, rising 0.41% to 107.25 as of press time. Meanwhile, the exchange rate of the Mexican peso against the US dollar and the exchange rate of the Canadian dollar against the US dollar both fell by more than 1%, and the exchange rate of the offshore renminbi against the US dollar also declined.

Mingze Wu, foreign exchange trader at StoneX Financial, said, “Risk sentiment is currently being dampened by Trump's tariff policy risks. The dollar is seen as a safe haven, and the currencies of affected countries such as the Mexican peso are being hit hard.” “This is probably just the beginning of the future.”

Benito Berber, the American chief economist at the French Foreign Trade Bank, said bluntly, “Fasten your seatbelt! Trump may be hoping to get something from Mexico, investors expect Trump to pose a huge threat, and the Mexican peso may be hit hard.”

It is worth mentioning that Trump's remarks are the first time since he won the election to remind people of the fluctuations his remarks may cause. Trump's remarks on social media during his first term as US president often caused sudden market fluctuations and disrupted the work and sleep schedules of global investors.

The prospect of Trump's possible imposition of high tariffs has made traders more cautious about the currencies of America's trading partners. According to data from the US Commodity Futures Trading Commission (CFTC), asset management companies have been removing bullish bets on the Mexican peso for the week ending November 19, while leveraged funds have turned bearish on the Mexican peso. Meanwhile, hedge funds and asset managers are also pessimistic about the Canadian dollar.

Wall Street veteran Bezent was nominated by Trump as US Secretary of the Treasury last Friday. Investors expect Bezent to mitigate the impact of the Trump administration's more aggressive trade and economic policy proposals. According to reports, Bezent called for a gradual approach to implementing trade restrictions and seemed willing to negotiate the specific scale of the tariffs proposed by Trump. In an interview, Bessent said that his top priority is to fulfill Trump's various tax reduction promises, cut expenses, and “maintain the status of the US dollar as the world's reserve currency.”

However, Mizuho Securities chief strategist Shoki Omori said, “Traders have overestimated the impact of this appointment. Even if Bezent tried to resolve the deficit, Trump ultimately had the ultimate power to influence America's fiscal position. This will be four turbulent years for global assets.”