Financial markets were shaken after Donald Trump took office and did not immediately impose new tariffs in his executive orders, but later reported punitive tariffs against Mexico and Canada.
The US president told reporters in the Oval Office of the White House that he plans to introduce US tariffs of 25% on imports from Mexico and Canada as early as February 1.
The U.S. dollar, which initially fell in the hours after Trump took office, reversed course after the comments to hit a five-year high against the Canadian dollar and rose 1% against the Mexican peso.
Financial markets, which rallied after Trump’s election victory in November, remained broadly calm in response to his return to the White House. American markets were closed on Monday for Martin Luther King Jr. Day. Asian markets were therefore the first to react. Japan’s Nikkei index oscillated between losses and gains and ended the day up 0.3%.
Other Asian markets also made modest gains, with Hong Kong’s Hang Seng climbing almost 1% and China’s Shenzhen market up 0.5%, while the Shanghai and South Korea bourse were slightly in red and that the Indian market lost almost 0.6%.
In Europe, the British FTSE 100 index rose only four points, to 8,524 by mid-morning. The German Dax and the Italian FTSE MIB fell slightly, while the French CAC rose 0.25%. The pound sterling and the euro lost around 0.6% against the dollar. The pound sterling rose 1.3% on Monday, its biggest daily rise since November 2023.
U.S. stock futures pointed to modest gains on Wall Street as markets opened at 2:30 p.m. GMT.
Oil prices fell, with Brent crude losing more than a dollar a barrel to $79.10 a barrel, while West Texas Intermediate fell $1.73 a barrel to $76.15 a barrel . Gold – seen as a safe haven – has regained favor, hitting a two-month high amid uncertainty over US tariffs.
“Once again, Trump appears to care little about those who are perceived as allies or enemies, with the Canadian and Mexican currencies taking a hit… So much for the plan to increase tariffs by 2% per month” , said Joshua Mahony, analyst at Scope. Markets.
“However, Chinese markets were clearly more optimistic, with Trump’s decision to reinstate TikTok followed by the absence of any mention of tariffs on Chinese imports. For now anyway.
Investors also keep an eye on the World Economic Forum in the Swiss ski resort of Davos, where political and economic leaders from around the world gather for their annual meeting. Among them is Ding Xuexiang, China’s vice premier, who may be relieved that Trump has not followed through on his plans to tax Chinese imports.
On Monday, Trump said he wanted to reverse the U.S. trade deficit with the EU by imposing tariffs or increasing U.S. energy exports.
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European natural gas prices fluctuated after it lifted the moratorium on new export licenses, easing uncertainty over long-term global supplies. Dutch one-month futures, the European gas benchmark, traded 0.3% higher at €48 per megawatt hour in Amsterdam.
The US president also reiterated his call for the EU to buy more US oil and gas if it wants to avoid tariffs. The United States is already Europe’s largest supplier of liquefied natural gas.
“More oil production, no indication of crypto mining, punitive tariffs against Mexico and Canada: these are the three key takeaways for investors from Trump’s inaugural address,” said Jochen Stanzl, chief market analyst at CMC Markets. Brent crude futures were flat at $80.1 per barrel.
“We can only hope that Trump will spare the EU and Germany from punitive tariffs until after the German general elections, because the outgoing government will hardly be able to react to changes in trade relations with UNITED STATES. However, this reprieve should not be considered permanent. Sooner or later, Trump will also target Germany.”
Bitcoin, which rose 4% on Monday to hit a new record high above $109,000 on hopes of a crypto-friendly administration, has retreated since then.
Stanzl said: “There were probably one or two investors who were hoping for more. It appears that Trump is prioritizing issues other than supporting the crypto industry. But one thing is clear: one positive word from Trump and bitcoin could rise significantly again. Investors are just waiting for this.
