Trump stirs tariff pot with fresh threats on EU Feb 1 China deadline
Trump’s pledge to slap 25% tariffs on Mexico sinks peso
U.S. President Donald Trumpon Tuesday vowed to hit the European Union with tariffs and said his administration was discussing a 10% punitive duty on Chinese imports because fentanyl is being sent from China to the U.S. via Mexico and Canada.
Trump voiced his latest tariff threats in remarks to reporters at the White House a day after taking office without immediately imposing tariffs as he had promised during his campaign.
The currency weakened as much as 1.4% before trimming losses. The selloff, the worst in emerging markets, came a day after Trump said he would slap tariffs of as much as 25% on Mexico and Canada unless the US neighbors did more to clamp down on immigration.
“It’s a lot easier for the Trump administration to pick on Mexico than China,” said Jack McIntyre, a money manager at Brandywine Global Investment Management. “It’s part of Trump’s love for weaponizing uncertainty.”
Investors have for months been trying to forecast how much of Trump’s rhetoric would become policy, while trying to position themselves for the impact of tariffs. The peso, one of the most heavily traded emerging-market currencies, lost 18.5% against the greenback last year, and now trades around the lowest level since mid-2022 at 20.7 per dollar.
Still, there’s plenty of uncertainty on whether Trump will follow through with his pledge to impose the tariffs, as he promised, by Feb. 1.
Financial markets and trade groups exhaled briefly on Tuesday, but his latest comments underscored Trump’s longstanding desire for broader duties and a new Feb. 1 deadline for 25% tariffs against Canada and Mexico, as well as duties on China and the EU.
Trump said the EU and other countries also had troubling trade surpluses with the United States.
“The European Union is very, very bad to us,” he said, repeating comments made Monday. “So they’re going to be in for tariffs. It’s the only way … you’re going to get fairness.”
