The US dollar is holding up despite uncertainty over the implementation of the customs duties announced by Trump. Forex traders wait for concrete actions before positioning themselves. The Mexican peso and the Canadian dollar are taking the hit.
While American President Donald Trump is increasing his declarations about his desire to impose customs duties, particularly against Mexico and Canada, the dollar is showing surprising stability on the foreign exchange markets. Investors are oscillating between concern and wait-and-see, waiting for concrete measures.
Trump threatens, the dollar resists
Despite the resounding announcements from the tenant of the White House upon his inauguration, the American currency displays great resilience against the euro, losing only 0.04% to 1.0420 dollars per euro around 8 p.m. GMT this Tuesday. Forex traders remain in suspense, as Adam Button of ForexLive explains:
Ultimately, actions speak louder than words and so far, Trump has not imposed tariffs.
If the new president reiterated on Monday his intention to tax Mexican and Canadian products at 25% from February 1, no decree to this effect has yet been signed. The markets seem to consider that there is no urgency on this issue and that the White House will proceed as under Trump’s previous mandate, with threats.
-Mexico and Canada under pressure
On the other hand, the mexican peso and the Canadian dollar are more affected. The peso fell on Monday before recovering 0.63% on Tuesday to 20.63 pesos per dollar. The Canadian currency lost 0.17% to 1.4335 Canadian dollars for the greenback.
Analysts at Brown Brothers Harriman anticipate that markets will continue to move in response to unpredictable US trade policy. But they also emphasize that the dynamism ofAmerican economy remains the main support of the dollar.
Towards a customs tax on Chinese products?
Concerning China, another target of Trump’s attacks during his campaign, the American president on Monday requested an audit of the bilateral trade agreement signed in 2020 to assess the need for changes. Here again, the investors demonstrate prudencescalded by the numerous martial declarations not followed by effects under the previous mandate.
Despite the relative calm of the markets at the moment, the question of customs duties and the commercial policy American promises to regularly agitate the American currency and those of its partners in the months to come. Forex traders stand ready to react to the slightest concrete action by the Trump administration on this highly sensitive front.
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