SINGAPORE – US President-elect Donald Trump said on Monday on his first day in office that he would impose a 25% tariff on all products from Mexico and Canada, and an additional 10% tariff on goods from China.
The announcement sparked a dollar rally. It rose 1% against the Canadian dollar and 2% against the Mexican peso, while Asian stock markets fell, as did European equity futures. S&P 500 futures were down 0.3%.[FRX/][MKTS/GLOB]
Here are the reactions from market participants:
NAKA MATSUZAWA, CHIEF MACRO ARTIST, NOMURA, TOKYO
“Ten percent across the board (in China) is not as big as what he was talking about, 60%. But it came in a tangible way, so I think the initial reaction was negative.
“If this stops at 10%, it will not be a disaster for the Chinese economy and probably less (for the economy) globally.”
GARY NG, CHIEF ECONOMIST, NATIXIS, HONG KONG
“It certainly shocks the market and looks at Chinese goods, especially the export industry because the profits of companies will be under pressure with this additional money.
“But compared to what he put up in Canada and Mexico, the size is not that big, so investors may still want to see what’s next and when the promised 60% will come.”
SIMON YU, DEPUTY GENERAL MANAGER, PANYAO ESTATE MANAGEMENT, SHANGHAI
“The fee is Trump’s card in negotiating with other countries.
“China already has a template for dealing with tariffs with reference to Trump 1.0. Regarding other issues such as technology-related sanctions, China may accelerate the process of self-confidence and substitution.”
GEORGE BOUBOURAS, HEAD OF RESEARCH, K2 ASSET MANAGEMENT, MELBOURNE
“What is important is to show that the topics of 25% tariffs with China, Mexico and Canada are not policies at the moment but they are good indicators that under Trump’s leadership they will no longer be able to tolerate the transportation of goods from China to NAFTA partners in the US by Chinese companies. .
“Headlines like this will continue to support a rising yield curve and a strong USD… as always when it comes to trade, currency or monetary policy changes, it’s going to be long and volatile.”
WILLIAM REINSCH, CHIEF SHEPHERD, CENTER FOR STRATEGIC AND GLOBAL STUDIES:
“This hurts me more than anything else.
“I think the idea is that if you keep hitting them in the face, eventually they will surrender.”
“It didn’t work with China, and I don’t think it will work with Mexico and Canada.”
SHOKI OMORI, JAPANESE MASTER DESK ARTIST, MIZUHO EXERCISES, TOKYO
“The initial reaction to CAD, MXN, etc. seems to have been big, but MXN seems to be strong because it just fell against the dollar when Trump was elected.
“MXN is favored by car traders, so I feel MXN will be bought by dip buyers if Trump doesn’t go ahead.
“The impact from Bessent is very limited. Even if he tries to control the deficit, Trump ultimately has the most power.”
JASON WONG, CHIEF MARKET MUNICIPALITY, BNZ, WELLINGTON
“It seems like we’ve just had a flashback to 2016 and the markets are back to reacting to tweets.
“It’s going to take time, and this is a new trend. The market will be moving, and it’s top of mind, but this is how he works…You can jump to conclusions but I wouldn’t jump into anything right now so the market just needs to catch up. You can’t read too much into these things.”
ROB CARNELL, HEAD OF REGIONAL RESEARCH, ING, SINGAPORE
“It reminds me a lot of four years ago, when you would wake up every morning and the markets would be hit by whatever the latest comment was. I’m tempted to take it with a grain of salt. He’s not the president yet.
“That’s the way you do things, right? You throw things around, you say different numbers, the markets react and maybe it doesn’t happen.”
ALEX LOO, FX AND MACRO STRATEGIST, TD SECURITIES, SINGAPORE
“While the USMCA agreement will still be renegotiated in 2026, it is possible that Trump is trying to start the renewal process early with Canada and Mexico with today’s tariff announcements. The MXN and CAD had a loose but subtle reaction outside the North American time zone. They contributed to the large movements seen in -Asia this morning.”
SEAN CALLOW, SENIOR FX ANALYST, ITC MARKETS, SYDNEY
“It was last month that Trump said ‘the best word in the dictionary is tariff’ so there should have been no surprise in Trump’s intentions, during the comments.
“The fall in trade-sensitive funds makes sense and should continue for the near term given the quiet calendar, but Fed policy should return to the fore as we approach the December FOMC meeting.”
KHOON GOH, HEAD OF ASIA RESEARCH, ANZ, SINGAPORE
“It looks like he’s not going to spend much time… so the question now is – on day 1 will he really follow and will the prices come in on day 1?
“One of the interesting things is that he has given his reasons for the charges (related to people and drugs) so it looks like these charges are conditional on those. Although this is the beginning of the opening, maybe this is just the beginning of the agreements that are known.”
TONY SYCAMORE, MARKET ANALYST, IG MARKETS, SYDNEY
“I’m just trying to reconcile how it works with Bessent’s nomination. People expected him to be a moderate voice. Maybe it’s also a reaction to hey, look, everybody thought Bessent would moderate some of those more extreme trade policies … but Trump won’t be treated it’s anyone.
“He said up to 60% on Chinese goods.. so if we’re just talking about an additional 10% tariff on Chinese goods on top of the existing tariffs, that’s a lot less than what he’s indicated before. … actually it might be less than the worst case scenario that we’ve been looking at.”
MATT SIMPSON, SENIOR MARKET ANALYST, CITY HEAD, BRISBANE
“It’s almost as if Trump wants to remind the markets who’s in charge, after appointing Scott Bessent as Treasury Sec – the man markets expect to cool Trump’s power. But with the Canadian dollar rising against the Mexican peso, the markets think this will hit Mexico very hard.”
(Reporting by Reuters’ Asia markets team in Sydney, Shanghai, Singapore, Hong Kong and Tokyo and Andrea Shalal in Washington. Editing by Tom Westbrook; Editing by Neil Fullick)
