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Mexican Peso Plunges 2.3% As Trump Threatens New Tariffs
(MENAFN- The Rio Times) The Mexican peso experienced a sharp decline of 2.32% in electronic trading on Monday afternoon, reaching 20.7541 pesos per dollar.
This sudden drop came in response to President-elect Donald Trump's threat to impose a 25% tariff on imported products from Mexico, China, and Canada.
The peso's official closing rate on Monday was 20.2833 pesos per dollar, according to Banco de México . However, by 6:00 PM Central Mexico Time, the currency had already weakened to 20.7541 pesos per dollar following Trump's statements.
Trump announced his plans on Truth Social, stating he would sign executive orders on January 20th to implement the tariffs. He cited concerns over drug trafficking, particularly fentanyl, and illegal immigration as justification for these measures.
Gabriela Siller, Director of Analysis at Banco Base, warned against retaliatory tariffs from Mexico. She explained that such a move would only increase inflation in Mexico without pressuring Trump to remove his tariffs.
Siller added that these tariffs would effectively nullify the USMCA trade agreement, potentially pushing the Mexican economy into recession.
Currency Market Volatility and Trade Tensions
Felipe Mendoza, a Financial Markets Analyst at ATFX Latin America, noted that Trump's declaration directly impacted the peso. He predicted increased volatility for the peso against the dollar in the coming days.
Trump's tariff threats extended beyond Mexico and Canada. He also proposed an additional 10% tariff on Chinese products, citing concerns over illegal immigration and drug trafficking.
Trump claimed that despite promises from Chinese officials to execute drug traffickers, no action had been taken. In early November, Mexico's Economy Secretary, Marcelo Ebrard, stated that Mexico would retaliate if the U.S. imposed a 25% tariff on Mexican imports.
In addition, Ebrard emphasized the potential negative impact on U.S. inflation and the economy, given Mexico's status as a major trading partner.
These developments highlight the complex interplay between trade policies, currency markets, and international relations. As the situation unfolds, economists and policymakers will closely monitor the potential economic repercussions for all countries involved.
This sudden drop came in response to President-elect Donald Trump's threat to impose a 25% tariff on imported products from Mexico, China, and Canada.
The peso's official closing rate on Monday was 20.2833 pesos per dollar, according to Banco de México . However, by 6:00 PM Central Mexico Time, the currency had already weakened to 20.7541 pesos per dollar following Trump's statements.
Trump announced his plans on Truth Social, stating he would sign executive orders on January 20th to implement the tariffs. He cited concerns over drug trafficking, particularly fentanyl, and illegal immigration as justification for these measures.
Gabriela Siller, Director of Analysis at Banco Base, warned against retaliatory tariffs from Mexico. She explained that such a move would only increase inflation in Mexico without pressuring Trump to remove his tariffs.
Siller added that these tariffs would effectively nullify the USMCA trade agreement, potentially pushing the Mexican economy into recession.
Currency Market Volatility and Trade Tensions
Felipe Mendoza, a Financial Markets Analyst at ATFX Latin America, noted that Trump's declaration directly impacted the peso. He predicted increased volatility for the peso against the dollar in the coming days.
Trump's tariff threats extended beyond Mexico and Canada. He also proposed an additional 10% tariff on Chinese products, citing concerns over illegal immigration and drug trafficking.
Trump claimed that despite promises from Chinese officials to execute drug traffickers, no action had been taken. In early November, Mexico's Economy Secretary, Marcelo Ebrard, stated that Mexico would retaliate if the U.S. imposed a 25% tariff on Mexican imports.
In addition, Ebrard emphasized the potential negative impact on U.S. inflation and the economy, given Mexico's status as a major trading partner.
These developments highlight the complex interplay between trade policies, currency markets, and international relations. As the situation unfolds, economists and policymakers will closely monitor the potential economic repercussions for all countries involved.
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