Trump Announces New Tariffs, Boosting the U.S. Dollar

U.S. Hits Canada, Mexico, and China with New Tariffs

Last Friday, former President Donald Trump announced that the U.S. would impose tariffs of 25% on Canada and Mexico, along with 10% on China. He warned that punitive duties would follow if Canada and Mexico failed to take stronger measures to curb the flow of fentanyl and its precursor chemicals into the U.S., as well as illegal migration. This announcement strengthened the U.S. dollar, pushing it closer to the 110 level.

(U.S. Dollar Daily Price Chart, Source: Trading View)

Additionally, Trump acknowledged that the broad tariffs in Mexico, Canada, and China could cause “short-term” economic pain for Americans. Global markets reacted with concerns that the tariffs might slow economic growth and fuel inflation. He planned to speak with the leaders of Canada and Mexico on Monday, though both countries had already announced retaliatory tariffs. However, he downplayed expectations of reversing his decision.

Trump’s tariffs will impact nearly half of all U.S. imports, requiring the country to more than double its manufacturing output—an impractical goal in the near term. Economically, escalating trade tensions present a lose-lose scenario for all parties involved. The tariffs risk pushing Canada and Mexico into recession while triggering higher inflation, sluggish economic growth, and rising unemployment.

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