Dollar Surges, Markets Plunge as Trump Imposes Tariffs

New York - The US dollar surged and equity markets plummeted on Monday after President Donald Trump imposed tariffs on imports from Canada, Mexico, and China.

Equities Tumble

European and US stock futures slumped following the punitive measures. Asia-Pacific shares recorded their largest decline in nearly six months.

Dollar Strengthens

The dollar rallied on bets that tariffs would stoke inflation and keep US interest rates high. The Canadian dollar sank to its lowest point since 2003. Emerging market currencies like the Indian rupee and Mexican peso also weakened.

Haven Demand

Investors sought safe-haven assets, leading to a drop in 10-year US Treasury yields. The euro extended its decline after Trump threatened additional tariffs on EU goods.

Escalating Tensions

Trump's actions represent the most significant protectionist measures by a US president in a century. They could impact inflation, geopolitics, and economic growth.

International Reaction

Canadian Prime Minister Justin Trudeau and Mexican President Claudia Sheinbaum announced counter-tariffs. China vowed to implement "corresponding countermeasures" and filed a complaint with the World Trade Organization.

Impact on Assets

Tariffs put assets linked to trade at risk. China's reopening market declined less than those of other Asian countries. Foreign exchange traders are monitoring the Chinese yuan for signs of government intervention to curb its decline.

Corporate Fallout

Automakers with exposure to Mexico and Canada may see significant losses. Electric vehicle manufacturers like Tesla and Rivian could also be affected.

Oil Prices Rise

Tariffs on Canadian and Mexican imports could disrupt North America's oil market and increase gas prices. West Texas Intermediate crude surged, narrowing its discount to Brent.

Market Response

"Financial markets may face a difficult adjustment as participants take the president seriously," said Karl Schamotta, chief market strategist at Corpay.

Key Events

Several economic indicators and earnings reports are scheduled this week, including Amazon.com, UBS Group, and the US nonfarm payrolls report.

Market Movements

Stocks
* S&P 500 futures: -2%
* Nikkei 225 futures: -2.7%

Currencies
* Bloomberg Dollar Spot Index: +1.2%
* Euro: -1.3%
* Japanese yen: -0.3%

Cryptocurrencies

* Bitcoin: -3.1%
* Ether: -14%