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The US dollar rose on Tuesday after Donald Trump pledged to levy additional tariffs on imports from Canada, Mexico and China, reigniting concerns about his trade policies.
The dollar index, which tracks a basket of currencies including sterling and the Japanese yen, rose 0.4 per cent on Tuesday morning.
The dollar index was down about 0.6 per cent on Monday, following Trump’s nomination of hedge fund manager Scott Bessent as Treasury secretary, an appointment investors took as a sign that the president-elect’s policies may be moderated.
But Trump’s announcement shows he is ready to move quickly on imposing tariffs on China and other countries, said Jason Lui, head of Asia-Pacific equity and derivative strategy at BNP Paribas.
The president-elect on Monday announced an additional 10 per cent tariff on China as well as a 25 per cent tariff on “all products” from Mexico and Canada.
“Yesterday the market narrative was that the nomination of Scott Bessent [was of] someone who understood the market and could reduce the more extreme policy scenarios”, said Lui.
“But by including Canada and Mexico on day one, it may open the door to faster tariffs on other trading partners”, he added.
The yield on the 10-year US Treasury nudged up 0.01 percentage points to 4.28 per cent. Yields move inversely to prices.
Chinese stocks rose slightly on the tariff news and the renminbi fell 0.1 per cent against the dollar. The Hang Seng China Enterprises Index of Chinese stocks traded in Hong Kong was up 0.3 per cent in morning trading, while the mainland CSI 300 index of Shanghai- and Shenzhen-listed companies edged higher by 0.2 per cent.
Brian Arcese, a portfolio manager at Foord Asset Management in Singapore, called it a “relief rally” in Chinese equities as the tariffs were smaller than some expected.
“[It] is largely a function of the tariff proposal being 10 per cent and not 60 per cent . . . though we wouldn’t be surprised to see these numbers change over time”, he said.
Stock markets in the rest of Asia declined. Japan’s export-heavy Nikkei 225 dropped 1.3 per cent and Taiwan’s Taiex fell 0.8 per cent, although Trump’s post on his social media site Truth Social did not make references to other countries.
The Mexican peso slipped 1.2 per cent against the dollar on Tuesday, the largest major currency fall, and the Canadian dollar declined 0.8 per cent.
