Not so Tariffic
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What are the new US tariffs on Canada, Mexico, and China and why were they imposed?
Well he's done it. President Trump has imposed tariffs on Canada and Mexico at twenty-five percent starting tomorrow and ten percent on China. And he says they could all go higher and all are promising retaliatory measures. So the trade war has begun. How far does it go and what are the consequences? And does the Fed just sit by and watch? Now it's real, or do we have to rethink the direction for growth, trade, and inflation? It's Monday, it's the third of February. twenty twenty five, it's the morning call from Nab. Good morning. So a shaky end to the week with the announcement of Taos on Mexico, Canada and China. The dollar finished up half percent on the DXY, the Canadian dollar down just naught point four percent, the Mexican peso down naught point three percent.
The C NY had barely moved, uh, and a bigger move actually was the Japanese yen, which finished down naught point six percent, the Aussie was up naught point one per cent, the pound down naught point two percent, the euro, uh well they could be next, of course, in Europe down naught point three percent. But expect bigger moves today as the news really sinks in. And a lot of the news actually happened after the markets closed on Friday. So bond yields a bit higher in the United States, just two basis points for ten years on Friday, up to four point five four percent, but down elsewhere, down six basis points in Canada, Germany, and France as well. But ten year yields up twelve basis points in Mexico.
And the stock market, well, the Dow finished Friday three quarters of a percent lower, half percent lower. We had small moves in Europe, but obviously more to follow today because uh the full news about it being implemented uh almost immediately uh hadn't really broken when the markets closed, and certainly the retaliatory measures were announced over the weekend. And oil a bit lower on the day on Friday as well, Brent down seventy to below seventy five seventy a barrel now. So that was Friday. Tariffs are happening. Uh twenty five percent for Canada and Mexico, as of uh well, soon, ten percent for China, and a warning for the EU, of course. And Marco Rubio, the uh new US Secretary of State, is in Panama, which is the next potential area of intrigue.
So a lot going on. It's Tappa Strickland with me today. So equity is actually doing okay on Friday till the tariff news came through and uh over the weekend Mexican. and Canada have both announced retaliation.
How are global currency markets reacting to the tariff announcements?
China's saying they're gonna do it as well at some point. So I mean surely there's a GDP impact to this, there's an inflationary impact. I mean it could be quite significant for all countries involved unless uh Donald Trump backs down and that seems unlikely.
Good morning, Phil. Uh yes, I think the actions on Friday and Saturday really crystallize uh that the US administration is very intent on using tariffs as uh both a negotiating tool and as perhaps as a structural feature to uh reduce trade deficits and to tackle other issues. And in regards to this one, uh at least the executive order itself is really tying the imposition of tariffs. Perhaps to taking action on fensinal and illegal drugs going across the borders and also illegal migration. But I guess the impact in terms of the economy and in terms of markets, the important thing to note is Friday only saw a partial market reaction. There was still a lot of uncertainty whether President Trump would go ahead with those tariffs, and that only really emerged very late in New York trade.
Indeed, the SP 500 at one moment prior to those developments. performance was up zero point seven percent and then obviously closed in the red down zero point five percent.
It was expected it was going to be March, wasn't it? It was actually strangely it was only till there was a press briefing on Friday afternoon that it emerged that it would actually be applied immediately. Before that everyone was believing it had been delayed for a month.
Yes, that's right. It's effective on the fourth, so uh effectively on on Tuesday. Um and then in terms of m market reaction is just starting to filter through now just as markets gradually start to open uh in New Zealand.
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Chapters
8 chapters
1
What are the new US tariffs on Canada, Mexico, and China and why were they imposed?
0:01–2:14
2
How are global currency markets reacting to the tariff announcements?
2:14–4:34
3
What impact could the tariffs have on US and Canadian GDP and inflation?
4:34–7:04
4
Why might tariff effects on inflation appear gradually rather than immediately?
7:04–9:20
5
How are US labour market data and payroll expectations influencing Fed policy amid tariffs?
9:20–11:16
6
What are the upcoming European and Asian inflation releases and why do they matter?
11:16–13:28
7
How could Australian retail sales and housing data affect the RBA’s rate outlook?
13:28–16:01
8
What key economic events are slated for the rest of the week and why should listeners watch them?
16:01–17:57