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President-elect Donald Trump has unveiled a proposed tariff plan targeting neighboring countries, suggesting a 25% tariff implementation. The announcement immediately impacted currency markets, with the Mexican peso (MXN=X) and Canadian dollar (CAD=X) experiencing declines during Tuesday's intraday trading session.
Macquarie Group FX & Rates strategist Thierry Wizman joins Catalysts to discuss this proposed tariff strategy.
"Although he threatened to slap tariffs on Canada and Mexico on day one, I suspect that's not really his intention. This is ultimately a game of chicken," Wizman tells Yahoo Finance.
He believes Trump's approach is strategically designed to get negotiation leverage, particularly on critical issues such as immigration, border security, and drug-related concerns. "I think by threatening, what he effectively gets is a willingness on the part of these countries to negotiate with the transition team ahead of day one," Wizman explains.
However, Wizman cautions that the potential outcomes are not definitively set, noting it's uncertain whether Trump would fully commit to concessions made by these countries.
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This post was written by Angel Smith