USD Tumbles as Trump Tariffs Postponed
London (Reuters) - The US dollar plunged on Monday after an official for the incoming Biden administration indicated that tariffs would not be imposed immediately. Trump, who takes office later today, had previously threatened tariffs of 10% on global imports, 60% on Chinese goods, and 25% on Canadian and Mexican products.
This potential for disrupted trade flows, increased costs, and retaliation has been alleviated by the latest announcement. The Canadian dollar, Mexican peso, and Chinese yuan each strengthened by 1-1.5%, while the euro rose 1.5%.
Market Reaction:
* Frederik Ducrozet, Pictet Wealth Management: "The market is highly responsive to this topic (tariffs)."
* Nick Rees, Monex Europe: "Markets are being overly optimistic. Targeted import levies are still possible."
* Kathleen Brooks, XTB: "Trump's executive orders will be pivotal. Reports suggest tariffs may not be implemented today."
* Boris Kovacevic, Converra: "The euro has rallied on the news of delayed tariffs, relieving trade concerns and boosting risk appetite."
While the initial reaction has been positive, analysts caution that details of the potential tariffs are still forthcoming. Trump has directed federal agencies to evaluate trade relationships with China, Mexico, and Canada. The extent and scope of any future tariffs remain uncertain.