Asia, Daily Dose

Trump Tariffs Cause Stocks to Drop and the Dollar to Advance – Asia Market Wrap

The Dollar rose, while equity markets and digital currencies fell after Trump followed through on his promise to put tariffs on imports from Canada, Mexico, and China.

European and US stock futures fell, while an index of Asia-Pacific shares fell the most in over six months in response to punitive measures imposed on some of America’s largest trading partners. Fears that the action may exacerbate pricing pressures pushed two-year US Treasury yields higher.

The quick escalation of hostilities is the most broad act of protectionism by a US president in over a century, with consequences ranging from inflation to geopolitics and economic growth. Trump stated that he plans to hold talks with Canada and Mexico on Monday before the tariffs go into effect. The tariffs are scheduled to go into force on February 4th, unless a last-minute agreement is reached.

The notion that tariffs will feed inflationary pressures and keep US interest rates high is driving the Dollar surge, while simultaneously harming other economies more than the US and increasing the Dollar’s safe-haven appeal.