21/01/2025 Daily Reports
U.S. stock futures struggled for direction on Tuesday following President Donald Trump’s announcement of potential 25% tariffs on Canada and Mexico starting February 1, citing border security concerns. Trump briefly mentioned China but provided no specifics, leaving traders uncertain about broader trade policy impacts.
The news disappointed those hoping for a break from new tariffs, especially after earlier reports suggested Trump might delay such actions in his first executive orders.
Despite the tariff concerns, investors remain optimistic about Trump’s pro-business agenda, including deregulation and tax cuts, which could bolster equities in the long term.
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Tariffs on Mexico & Canada by Feb. 1:
- President Trump announced plans to impose 25% tariffs on imports from Mexico and Canada, citing concerns over undocumented immigration and drug trafficking.
Impact on Trade:
- Threatens $1.8 trillion in annual trade under the US-Mexico-Canada Agreement (USMCA).
- Both Canada and Mexico have vowed retaliatory tariffs on American goods.
Auto Industry at Risk:
- Tariffs could hit $97 billion in auto parts and 4 million vehicles imported from Mexico and Canada annually.
- Analysts predict new car prices may rise by $3,000 on average.
Market Reaction:
- The dollar strengthened, while the Canadian dollar and Mexican peso fell by as much as 1.4%.
- Relief for Chinese markets, as Trump refrained from announcing levies on China.
Universal Tariffs Considered:
- Trump hinted at a potential universal tariff on all imports but said he is “not ready yet.”
Response from Canada & Mexico:
- Canada has prepared a C$150 billion list of US goods for retaliation.
- Mexico emphasized its record fentanyl seizure and efforts to address Trump’s concerns.
What’s Next?
- The proposed tariffs could escalate tensions, disrupt industries, and drive inflation in the US.
- While Trump’s focus on border security and drug control is understandable, enacting such significant tariffs risks unintended consequences. The potential price hikes for consumers and retaliatory trade measures could undermine economic stability.
