US tariffs: Canada, Mexico, China bear the brunt; dollar surges while global currencies see extreme lows

US President Donald Trump’s latest trade war proved to be a major blow for Canada, Mexico and China, pushing their currencies to multi-year lows.
The greenback recorded a major gain while weighing down Euro to a two year low and injuring the conventional safe haven Swiss frank to its lowest since May.

However, two biggest trading partners for the States’ Canada and Mexico, wasted no time in vowing retaliation measures. China also condemned the move, claiming it would challenge the tariffs at the World Trade Organization, news agency Reuters reported.
Last month after assuming office, Trump had threatened to hit Canada and Mexico with a 25 per cent tariff and while China stood at a levy of 10 per cent, alleging to combat issues like illegal immigration and drug trade.
Market fallout and dollar strength
The dollar index, which tracks the greenback against six major currencies, gained 0.11 per cent to 109.65 after hitting a three-week high previously in the session.
The tariff news also shifted expectations for Federal Reserve policy. Traders scaled back bets on interest rate cuts, pricing in just 41 basis points of easing this year—down from 47 basis points previously.
Yuan: The US dollar climbed 0.7 per cent to 7.2552 yuan in offshore trading, after briefly hitting a record 7.3765 yuan. With Chinese markets closed for Lunar New Year, traders expect further volatility when trading resumes on Wednesday.
Peso: It jumped 2.7 per cent to 21.40 Mexican pesos, the highest since March 2022.
Canadian dollar: The Canadian dollar weakened 1.4 per cent to C$1.4755 per US dollar, a level last seen in 2003.
Euro: It plunged 2.3 per cent to $1.0125, a low last recorded in November 2022, before a minor reverse back to $1.0257.
Sterling: It fell 0.74 per cent reaching $1.2304.
Yen: Though global markets were tumbling down, the Japanese yen held firm at 155.50 per dollar.
US economic data released on Friday showed the personal consumption expenditures (PCE) price index, closely observed by the Federal Reserve—rose 0.3 per cent in the past month, the largest increase since April 2024. This suggests the Fed may be in no rush to resume cutting interest rates.
Meanwhile, cryptocurrencies took a hit. Bitcoin slid 4.4 per cent to $97,622, falling back below $100,000 for the first time in nearly three weeks. Ether tumbled 15 per cent to $2,812.8, its lowest level since early November.
Further lookout for trade war
Donald Trump is expected to discuss the tariffs with Canada and Mexico, arguing that Americans may feel economic "pain" from the 25 percent duties but that it will be "worth the price."
He informed news agency AFP of "speaking with Prime Minister (Justin) Trudeau tomorrow morning, and I'm also speaking with Mexico tomorrow morning."
"I don't expect anything very dramatic," he added.
China, Mexico and Canada are the top three US trade partners and all have vowed to retaliate when the tariffs take effect Tuesday.