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Donald Trump’s tariffs swallowed up in the currency markets early on Monday, with the Canadian dollar and Mexican peso hit as investors rush with the assessment that collections would affect the largest American trade partners.
The Canadian dollar came under pressure because trading began in the Asian-Pacific region, falling 1.4 percent to $ 1,473 compared to its American colleague-legged level since 2003. Mexico slid more than 2 percent to 21.15 compared to the dollar. The euro also lost 1 percent.
The quantities of trading are usually very thin in the early session, which can exacerbate the movement of prices.
The steep decrease came after Trump on Saturday imposed 25 percent of tariffs on all imports from Mexico and Canada, with a lower 10 percent of Canadian energy collection and a new 10 percent of imports from China. He also threatened new levies against the EU last week.
Economists have warned that new tariffs are likely to accelerate inflation in the US, something that encouraged the offering of treasures and dollar after Trump’s elections in November.
“The clearest implication is a stronger dollar,” said Eric Winograd, the main economist of Allianceberntein. “The long position in the dollar is the strongest, clearest expression of a trade war that is now running.”
“The currencies that will suffer the most are those against which the tariffs are imposed,” Winograd added, noting that “there is a good case for the stock market to suffer a little.”
George Saravelos of Deutsche Bank said that the tariff announcements were “in the highest Sokol area of the protectionist spectrum we could have predicted” and that markets are required for “structural and significant reprise of premiums in the trade war”.
The Mexican Peso has come across in recent weeks because traders have carefully reviewed the announcements of new Trump administration for traces of how fast and how extensive the new levy will be.
“If the tariff stays for several months, the course will reach a new historic maximal,” said Gabriela Siller, the main economist of the Banco Mexican base, citing the number of pesos per dollar. “If the tariff stays on it will be a structural change for Mexico.. Mexico could also enter a deep recession that will take years to go out.”
For comparison, BBVA analysts in Mexico said they believe that it is unlikely that the tariffs will last a long time. However, if they stay in place, he said he would have a “very negative” impact on investment in Mexico and its competitiveness.
