Following President Donald Trump’s announcement that he is considering enacting new tariffs on Canada and Mexico, stock markets in the Asia-Pacific area gave up early gains.
Shares opened higher on Monday following Trump’s promise to usher in a new “golden age” for America in his inaugural address. He has pledged a bold program that might increase corporate profits, including trade changes, tax cuts, and regulatory reductions. However, other analysts have cautioned that the policies would potentially create inflation, which might compel the Fed to hike interest rates.
“We’re thinking in terms of 25 percent on Mexico and Canada, because they’re allowing vast numbers of people — Canada’s a very bad abuser also — vast numbers of people to come in, and fentanyl to come in,” Trump said in the Oval Office.
During campaign, He also promised to impose 10% tariffs on all imports into the US and to impose a 60% import tax on China during the election campaign.
Trump has claimed that tariffs will increase American wealth, but others claim that consumers will probably bear the brunt of the price.
Additionally, the president has stated that he will establish a “External Revenue Service” to collect all taxes, levies, and income from overseas sources.
On Tuesday morning, Japan’s Nikkei 225 index was 0.1% higher, South Korea’s Kospi was down 0.1% and Australia’s ASX 200 rose by around 0.6%.
Meanwhile, the dollar regained some ground against some other major currencies, including the pound and the euro.
“Market sentiment was dented during the signing of executive orders by President Trump in the Oval Office,” said Tim Waterer, chief market analyst at financial services firm KCM Trade.
“Investors heard more explicit details regarding the Trump tariff agenda, which sullied the market mood somewhat.”
US markets were closed on Monday for the Martin Luther King Jr Day holiday.