The global financial markets are bracing for impact as U.S. President Donald Trump's tariffs on Mexican, Canadian, and Chinese imports are set to take effect tomorrow. In a move that has sent ripples across the financial landscape, the implementation of these tariffs is expected to constrain the upside potential of the U.S. dollar due to declining growth prospects for the U.S. economy. Swissquote Bank Ltd has issued a report highlighting these developments, stating that the move may backfire, leaving all parties involved worse off.
The tariffs have swiftly dampened risk sentiment, with equities on both sides of the Atlantic expected to suffer. The report from Swissquote Bank emphasizes that it is for informational purposes only and should not be seen as an offer or solicitation to buy or sell any financial instrument. As trade tensions rise, oil companies find themselves in a precarious position; they are unlikely to benefit from any Trump-led increase in oil prices.
Cryptocurrencies have not escaped the turmoil, with Cardano and Solana continuing to trade in the red on Monday after significant losses last week. The broader crypto market has experienced selling pressure due to the tariff implementation, causing concern among investors. Meanwhile, traditional currencies like the Mexican peso have taken a hit, gap-opening at their lowest levels since March 2022.
The currency markets are reacting strongly to the tariff news, with the USDCAD rising to flirt with the 1.48 level. The euro also saw a decline, while crude oil prices surged following the tariff announcements. Despite the economic uncertainties, the U.S. dollar remains strong, exerting downward pressure on the GBP/USD pair and benefiting from increased demand as a haven asset in times of market turmoil.