The US dollar hit a four-month low Wednesday morning following a warning from US President Donald Trump that his decision to impose new 25 percent tariffs on imports from Mexico and Canada and an additional 10 percent levy on goods from China will cause “a little disturbance.”
“Tariffs are about making America rich again, and making America great again. It’s happening, and it will happen rather quickly,” Trump said in his first major policy speech since he took office.
“We have been ripped off for decades by nearly every country on earth,” Trump added.
All three countries – the top three trading partners of the US – retaliated with levies of their own, sparking worries about a potentially devastating trade war and a slowdown in the global economy.
The dollar index, which measures the greenback against a basket of major currencies, fell to 105.35 yesterday morning, sparking concerns that Trump’s policies could push the American economy into a contraction and talks that the dollar could lose its safe-haven status.
Analysts at Deutsche Bank told The Guardian: “We have published today on a concern around the loss of the dollar’s safe-haven status. Our views on this are evolving and will depend on the US policy path in coming months, in particular on the extent to which it continues to pursue disruptive domestic economic outcomes.”
Global stocks had tumbled Tuesday after China, Mexico and Canada hit back at US tariffs and fears grew that Europe could be Trump’s next target.
China responded by saying it would impose levies of 10 and 15 percent on a range of US agricultural imports. Similarly, Canada announced 25 percent levies on $155 billion worth of US goods. Prime Minister Justin Trudeau attacked Washington’s “dumb” trade war, and accused Trump of trying to cause the collapse of Canada’s economy to make it easier for the United States to annex his country.
Mexican President Claudia Sheinbaum said there was “no reason, rationale or justification” for Trump’s actions and vowed retaliation, saying she would announce Mexico’s response at an event on Sunday.
There was speculation some tariffs could be walked back after US Commerce Secretary Howard Lutnick told Fox Business he thought Trump would “work something out” with regards to Canada and Mexico.
“Somewhere in the middle will likely be the outcome, the president moving with the Canadians and Mexicans, but not all the way,” he said.
As this developed, Canada has filed a complaint with the World Trade Organization against the United States over Trump’s dramatic tariff increases, the WTO confirmed on Wednesday.
Late Tuesday, Canadian ambassador to the WTO Nadia Theodore wrote on LinkedIn that “the US decision leaves us with no choice.”
She said she had, “on behalf of the government of Canada, requested WTO consultations with the government of the United States in regard to its unjustified tariffs on Canada.”
A WTO official confirmed that “Canada initiated dispute proceedings yesterday against the US at the WTO on the additional tariffs,” following a similar complaint filed by Beijing over fresh US levies on Chinese goods.
On Tuesday, Trump declared “America is back” in his first address to Congress since returning to power, touting his radical policies in the face of raucous Democratic hostility while proclaiming a breakthrough on Ukraine.
The Republican repeatedly hailed billionaire advisor Elon Musk’s controversial assault on the federal bureaucracy and said his administration was “just getting started.”
“The American Dream is unstoppable,” said Trump in a speech lasting over one hour and 40 minutes, which beat Bill Clinton’s record for his State of the Union speech in 2000.
Almost every line got loud applause from Republican Party members, including on two occasions when Trump singled out SpaceX and Tesla tycoon Musk, who stood up to salute Congress.
But protests also began within minutes.
One Democratic congressman, Al Green, was ejected because he refused to stop heckling Trump over healthcare programs, and shaking his walking stick at the president.
Other Democrats silently held up placards including “False” and “Musk steals” and “That’s a lie!”
And at one moment, numerous Democrats yelled “January 6!” at Trump, referring to his supporters’ violent attack on the Capitol in 2021 after he refused to concede his election loss.
The 78-year-old president was undeterred, hailing his first six weeks and vowing to press on with his polarizing bid to reshape the US government and end the Ukraine war—whatever the cost.
To cheers of “USA” and “Trump, Trump, Trump,” the US President also proclaimed that his culture war on diversity programs and transgender rights meant “our country will be woke no longer.”
He claimed that he was trying to resolve an “economic catastrophe,” despite inheriting the strongest developed economy in the world from his Democratic predecessor Joe Biden.
Trump likewise bannered his administration’s move to launch “the most sweeping border and immigration crackdown in American history.”
Trump claimed some 21 million immigrants entered the US illegally during Biden’s presidency, characterizing many of them as dangerous criminals.
During Trump’s first three weeks in office, the Immigration and Customs Enforcement arrested about 14,000 people, border czar Tom Homan said last month. With AFP