HONG KONG: Asian markets saw big fluctuations Tuesday (Jan 21) as Donald Trump took office warning he could impose stiff tariffs on Canada and Mexico next month but appeared to delay any action against China for now.
The new US president's announcement that the country's closest neighbours could be hit with 25 per cent levies as soon as February 1 also jolted currency markets, with the Mexican peso and Canadian dollar tumbling.
His comments came amid the signing of a slew of executive orders that indicated he could resume his hardball approach to global diplomacy and trade, including pulling out of the Paris climate accord and the World Health Organisation.
He also gave social media app TikTok 75 days to find a buyer for its US business, after it missed a deadline Saturday ordering its Chinese owners ByteDance to sell its US subsidiary to non-Chinese buyers or be banned.
"We're thinking in terms of 25 per cent 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," he said in the Oval Office.
He had earlier said he would "immediately begin the overhaul of our trade system to protect American workers and families".
"Instead of taxing our citizens to enrich other countries, we will tariff and tax foreign countries to enrich our citizens," he announced in his inaugural address.
Markets in Asia and Europe had enjoyed a healthy run-up Monday -- with Frankfurt hitting another record -- on hopes Trump would take a more gradual approach to trade policy, after news of positive talks with Chinese President Xi Jinping added to the optimism.
However, his warning to Ottawa and Mexico City dealt a blow to sentiment, sending most Asian markets into the red.
Shanghai, Singapore, Seoul, Wellington and Taipei fell while Tokyo was slightly higher but off earlier highs. Hong Kong also edged up with Sydney and Manila.
The dollar, which had weakened across the board Monday, bounced against its major peers, but its biggest gains were against the Mexican peso and Canadian dollar, with the latter at its weakest since the start of 2020 during the pandemic.
Charu Chanana, chief investment strategist at Saxo Markets, said: "The tariff respite was short-lived, as expected, with the latest headline signalling that tariffs have been delayed but not averted.
"However, it seems like Canada and Mexico are in the focus but negotiation hopes are kept alive for China, suggesting China markets may still be supported."
Wall Street was shut Monday for the Martin Luther King holiday, but US stock futures were solidly higher. - AFP
