Stock markets cautious as Trump signals new tariffs
2025-01-21
Category: economic

Stock markets in the Asia-Pacific region gave up early gains after President Donald Trump said he is thinking of imposing new tariffs on Mexico and Canada.Shares opened higher after Trump pledged in his inaugural address to bring in a new "golden age" for America.He has promised an ambitious agenda - including trade reforms, lower taxes and cuts to government regulations - which has the potential to boost company profits.But some economists have warned that the measures may also raise inflation, which in turn could force the Federal Reserve to increase 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 the election campaign, he also pledged tariffs of 10% on all imports into the US and said he would hit China with a 60% import tax.Trump has said tariffs will make Americans richer, although critics say the costs are likely to be passed on to consumers.The President has also said he would create an "External Revenue Service" to collect all tariffs, duties and revenues from foreign sources.On Tuesday morning, Japan's Nikkei 225 index was trading flat, South Korea's Kospi was down about 0.2% 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. 
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