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India
The US dollar took a sharp fall on Wednesday, hitting its lowest level in three months, after President Donald Trump announced a new round of tariffs on Canada, Mexico, and China. The move immediately triggered retaliatory measures from these countries, escalating trade tensions and causing a ripple effect across global stock markets.
Trump’s Tariffs on Canada, Mexico, and China
On Tuesday, President Trump imposed a 25% tariff on goods imported from Canada and Mexico. This came just a day after he signed an executive order doubling tariffs on Chinese imports from 10% to 20%. The administration also signaled its intention to levy tariffs on goods from the European Union, with a 25% tariff planned on aluminum and steel imports.
Economists and financial analysts have raised concerns that these tariffs could lead to higher inflation, slow down economic growth, and negatively impact corporate profits. Several reports had already indicated signs of a cooling US economy before the new tariffs were put in place.
Key Developments in the Trade War
- President Trump’s tariffs on Canada and Mexico officially took effect on Tuesday.
- Canadian and Mexican imports will now be subject to a 25% tax, while Canadian energy products will face a 10% import duty.
- Tariffs on Chinese imports, which were initially set at 10% in February, have now been increased to 20%.
- In retaliation, China imposed tariffs of up to 15% on US goods and expanded export controls on more than two dozen American companies.
- Canada announced a 25% tariff on C$30 billion worth of US imports.
- Mexico followed suit, implementing 25% retaliatory tariffs on selected US products.
- The European stock market reacted sharply, with defense and manufacturing stocks rising and the euro strengthening against the US dollar.
- The Paris stock exchange rose by 2.1%, Milan by 2.2%, and London saw a modest 0.5% increase.
- However, Canada’s main stock index erased all its recent gains, with the S&P/TSX Composite Index falling by 1.7% in Toronto, marking its lowest close since January 13.
- Copper prices in New York surged by over 5%, fueled by speculation that Trump could extend the 25% tariff to copper imports as well.
US to Announce More Tariffs on Canada and Mexico
US Commerce Secretary Howard Lutnick stated that a further announcement regarding tariffs on Mexico and Canada is expected later on Wednesday. He mentioned that President Trump is considering targeted exemptions for specific industries, including automobiles, to mitigate some of the trade war’s impact.
Trump Defends Tariffs, Promises Economic Boost
Despite the backlash, President Trump remains firm in his stance, insisting that tariffs will strengthen the US economy. Speaking about his economic policies, he said, “Tariffs are about making America rich again and making America great again. And it’s happening, and it will happen rather quickly.”
Trump has argued that these tariffs will generate “trillions and trillions” in revenue and reshape global trade dynamics in favor of the United States.
As the US and its trading partners continue to impose retaliatory tariffs, the global economy faces growing uncertainty.
