The US dollar is underperforming against all G10 currencies on Monday morning as investors prepare for a deadline for President Trump’s tariffs on Mexico, Canada and China.
US Commerce Secretary Howard Lutnick confirmed on Sunday that the tariffs would be imposed on Tuesday. At the same time, China’s state-run media signaled that trade retaliation was coming, raising concerns that the trade war could escalate in the next 24 hours.
Lutnick told Fox News: “On Tuesday, tariffs will be imposed on Mexico and Canada. Exactly as they are, we will leave that to the president and his team to negotiate.”
The dollar has been on a slippery slope since Sunday evening.
Late last week, Trump wrote on Truth Social that fentanyl is still being smuggled into the United States at “unacceptable levels” and that tariffs on source countries are the only way to stop the drug overdose crisis that kills 100,000 Americans a year.
“We cannot allow this scourge to continue to harm the United States, and so until it is stopped or severely curtailed, the proposed TARIFFS will indeed go into effect on MARCH FOURTH as scheduled,” Trump said, adding, “An additional 10% tariff will also be imposed on China on that date.”
Before the tariff war escalated, China’s state-backed newspaper Global Times cited an anonymous source, likely a CCP official, as suggesting that Beijing was preparing retaliatory measures against US agricultural exports.
Here’s more from the report:
In response to a question about a Global Times report that cited a reliable source as saying that China is studying and preparing appropriate countermeasures against the US threat to impose an additional 10 percent tariff on Chinese products under the pretext of fentanyl, Chinese Foreign Ministry spokesman Lin Jian said on Monday that China firmly opposes the US move to impose tariffs on fentanyl imports and will take “necessary measures” to firmly safeguard its legitimate rights and interests.
The Global Times newspaper reported on Monday that the countermeasures are likely to include both tariffs and a range of non-tariff measures, and are likely to list US agricultural and food products, citing a source who requested anonymity.
“I have expressed China’s serious position on this issue,” Lin said in response to a media question seeking confirmation and comment on the Global Times report.
After US President Donald Trump said in a social media post on Thursday that the US would impose tariffs on Canada and Mexico starting March 4 and that “on that date, a 10% tariff will also be levied on China,” Chinese Foreign Ministry spokesperson Lin said on Friday that China firmly condemns and strongly opposes this move and will resolutely defend what is necessary.
“If the US continues to use the fentanyl issue to pressure, blackmail, coerce and threaten China, it will only backfire and deal a blow to the dialogue and cooperation between China and the US in the field of drug control,” Lin said on Friday.
Beijing’s potential tariff hike on U.S. farm goods is a playbook in Trump’s first term at the start of a trade war, during which U.S. soybean sales to China fell 80% in two years.
On the macro front, all these uncertainties are increasing, especially in trade, which some analysts, including Goldman analysts, are warning of “growth fear and tariffs.”
White House trade adviser Peter Navarro told CNBC ahead of tomorrow’s deadline that he doesn’t see Trump wavering on tariffs…
