In a move that has stirred global markets, President Trump renewed US tariffs on China while opting to delay similar measures against Canada and Mexico. The American leader's decision followed a conversation with his Canadian and Mexican counterparts on Monday, easing fears of escalating trade wars. Consequently, the AUD/USD pair saw a rise to 0.6255 on Tuesday, extending its upward momentum from the previous day.
President Trump's diplomacy has been described as a "classic case of 'hit 'em with a big stick, then dangle the carrot'." This approach involved the renewal of 25% tariffs on Chinese goods, while simultaneously offering a month-long delay for Canada and Mexico. Market analysts suggest that this strategic postponement has played a pivotal role in allaying immediate concerns about trade tensions in North America.
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The impact of these developments was promptly felt in the currency markets. The AUD/USD pair, which had begun its ascent on Monday, continued its upward trajectory on Tuesday. Analysts attribute this rally to a combination of factors, including reduced fears of trade wars between the US and its North American neighbors.
President Trump's conversation with Canadian and Mexican leaders appears to have been a crucial factor in delaying the tariffs. By temporarily shelving these measures, the US administration has managed to strike a delicate balance between asserting its trade policies and maintaining stable relationships with neighboring countries.