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The U.S. dollar surged on Monday after President Donald Trump imposed sweeping tariffs on Canada, Mexico, and China, triggering immediate retaliation from trading partners. Global markets reacted sharply, with the euro plunging, the yuan hitting record lows, and Bitcoin falling below $100,000.
Global financial markets reacted strongly on Monday after U.S. President Donald Trump imposed tariffs on Canada, Mexico, and China, escalating fears of a full-scale trade war.
The U.S. dollar strengthened, sending the Canadian dollar and Mexican peso to multi-year lows, while China’s offshore yuan fell to a record low. The euro also plunged to its weakest level since 2022, and Bitcoin dropped below $100,000 as investors adjusted to the impact of new trade barriers.
Canada and Mexico, the top two U.S. trading partners, immediately vowed retaliatory measures, while China announced plans to challenge the tariffs at the World Trade Organization (WTO).
The U.S. dollar advanced against major currencies:
Mexican peso fell to its lowest since 2022, trading at 21.40 per dollar.
Canadian dollar dropped to C$1.4755 per U.S. dollar, its weakest level since 2003.
Euro fell 2.3% to $1.0125, before recovering slightly.
Bitcoin dropped 4.4% to $97,622, slipping below $100,000 for the first time in weeks.
“The surprise for markets is that Canada and Mexico retaliated immediately, and that China and the EU may follow," said Tony Sycamore, market analyst at IG.
As Trump had promised, the U.S. imposed:
25% tariffs on imports from Canada and Mexico
10% tariffs on Chinese goods
Trump justified the measures as necessary to combat illegal immigration and the drug trade. However, analysts warn that immediate retaliation from Canada and Mexico, combined with China’s WTO challenge, could further destabilize global trade.
"Trump's early strike, just two weeks into his four-year term, is likely to hit investor confidence," said Mansoor Mohi-uddin, chief economist at the Bank of Singapore.
With markets already bracing for potential tariffs on Europe, analysts warn that sustained trade disputes could lead to stagflation—weak growth combined with rising inflation.
What’s Next?
As global markets adjust to the new tariffs, investors are also scaling back expectations of Federal Reserve interest rate cuts, with traders now pricing in just 41 basis points of easing for 2025.
With retaliatory measures already in place and uncertainty surrounding future U.S. trade policy, financial markets are likely to see continued volatility in the days ahead.
The United States has rescinded licensing restrictions on ethane exports to China, allowing shipments to resume after a temporary halt and signalling progress in efforts to ease recent trade tensions.
A magnitude 5.5 earthquake struck off Japan’s Tokara Islands on Wednesday, with no tsunami warning issued but residents advised to remain vigilant.
The European Commission is set to propose allowing carbon credits from other countries to count towards the EU’s 2040 climate target, according to a leaked internal document.
China has ramped up efforts to protect communities impacted by flood control measures, introducing stronger compensation policies and direct aid from the central government.
Italy plans to grant approximately 500,000 work visas to non-EU nationals between 2026 and 2028, as announced in a cabinet statement. The initiative aims to address labor shortages by expanding legal immigration pathways
Unexpected weakness in Germany's manufacturing orders in May signals ongoing uncertainty in industrial demand, despite a yearly rise and sector-specific gains.
Oil futures fell on Friday after Iran reaffirmed its commitment to nuclear non-proliferation and amid expectations that major producers are set to agree to raise their output this weekend.
Russia actively shifted its trade focus away from Europe and the United States, redirecting it toward markets in friendly countries—primarily China, India, Central Asia, Africa, and the Middle East. The share of these countries in Russia's foreign trade has increased from 46% to 82%.
Fast fashion retailer Shein has been fined €40 million ($47.17 million) by France’s antitrust watchdog for allegedly having misleading discounts and unclear environmental claims, despite the company’s claim that the issues were fixed a year ago.
A multimodal cargo airport in Azerbaijan’s Alat Free Economic Zone (FEZ) is scheduled for commissioning in Q1 2027, the deputy head of the FEZ governing body Ismail Manafov announced.
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