(Bloomberg) -- The Canadian dollar and Mexican peso slumped after President Donald Trump affirmed the launch of 25% tariffs on products from both nations beginning Tuesday, the latest in a string of trade announcements from the administration that have buffeted investors in the $7.5 trillion-a-day foreign-exchange market.
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The loonie dropped as much as 0.6% to 1.4542 and the peso slid 0.9% to 20.75 against the US dollar on Monday, touching the weakest levels since Trump’s previous tariff deadline — for early February — caused traders to sell the Canadian and Mexican currencies. The Bloomberg Dollar Spot Index pared an earlier loss and was down 0.5% while the S&P 500 saw the worst selloff of the year.
The moves came as Trump told reporters on Monday that there was no room for Canadian or Mexican officials to negotiate a reprieve from the levies, which are slated to go into effect on March 4.
“Markets had expected some concessions — either another punt or a lower-than-25% tariff rate,” said Shaun Osborne, the chief currency strategist at Scotiabank. “Sliding US yields and weaker US stocks suggest markets are wary of the negative repercussions of hefty tariffs on Canada and Mexico on key industrial sectors in the US very quickly.”
The White House also said Monday that Trump had signed an order to raise levies on China to 20% from 10%, according to a post on X from the White House’s Rapid Response account. China’s yuan weakened 0.2% to its session low versus the dollar in the offshore market.
Tariff risk has flared repeatedly for the two currencies this year. The administration postponed a previous tariff deadline on Canada and Mexico due to go into effect in early February, though levies on China were enacted.
Some market participants expected more volatility on Tuesday.
“Given this language from the White House this afternoon, signs point to a very dollar-positive open tomorrow,” said Helen Given, a foreign-exchange trader at Monex. “The next session is going to be very volatile and the moves on the Canadian dollar and Mexican peso this afternoon could just be the beginning.”
Traders in options underlying the foreign-exchange market have steadily built up hedges against losses in the loonie and peso in recent weeks. The options bets showed traders loading up on protection against weakness in those currencies against the dollar, even as they were more sanguine on risks to China’s yuan.