The dollar partially recovered on Tuesday after a decline the previous day. President Donald Trump hinted at imposing tariffs on Canada and Mexico by February 1, contradicting suggestions of a gradual trade policy. Trump mentioned considering tariffs around 25% but did not provide further details. He also mentioned the possibility of universal tariffs but stated that the U.S. was not prepared for that yet.
Following Trump's comments, the dollar had dropped significantly on Monday when no specific tariff plans were announced. The market saw relief when officials hinted that any new taxes would be introduced gradually. The immediate response was a decrease in value for the Canadian dollar and Mexican peso, and a rise in the dollar.
The dollar index, which compares the currency against six others, increased by 0.6% to 108.58. The euro slightly decreased to $1.0362 from $1.0434 earlier in the day. Trump had also mentioned addressing the trade deficit with the EU through tariffs or by increasing the purchase of U.S. oil and gas.
The market's reaction emphasized the possibility of fluctuation due to Trump's dynamic policy approach. The yen, seen as less susceptible to tariffs, remained stable against the dollar. The yuan also experienced fluctuations as Trump had previously threatened China with substantial tariffs.
Overall, Trump's remarks and policies are expected to continue affecting currency values, creating volatility in the market.