U.S. tariffs on Canada and Mexico cause euro depreciation, dropping to $1.03.
Unfiltered Rant:Listen up, folks! Here's the skinny on the Euro's tumble in January of last year. The EU's currency dropped like a stone to hit its lowest level since November 2022, plummeting down to 1.0141 dollars. What caused this economic earthquake? U.S. tariffs on Mexico and Canada, that's what!
But don't be fooled, the tariffs weren't slapped on in January 2017, like some might have you believe. No way, Jose! Those tariffs didn't rear their ugly head until much later in Trump's term, mainly in 2019 and beyond. So, don't be fooled by the misinformation floating around.
The Euro was trading at 1.0306 dollars at 16:00 GMT, a far cry from its closing price on Friday at 1.0393 dollars. The European Central Bank (ECB) set the reference exchange rate at 1.0274 dollars.
Initially, the specter of a trade war stirred up fear, thanks to the U.S. slapping 25% tariffs on Mexico and Canada by the Trump administration. But as the clock ran out on the final hours of trading, the Euro started climbing back, thanks to a deal struck between Mexican President Claudia Sheinbaum and Trump to postpone the new tariffs.
According to Commerzbank analyst Ulrich Leutmann, the tariffs increase inflationary pressure in the U.S., pushing up prices and giving the Federal Reserve a reason to tighten monetary policy. This economic strong-arm sends investors running towards the dollar, thanks to higher interest rates.
However, Ulrich Leutmann suspects that the possibility of Trump imposing tariffs on the EU could lead to a temporary euro-dollar parity. But he's not holding his breath, stating it's not in the U.S.'s interest for the dollar to appreciate too much.
In conclusion, the Euro's tumble in January 2017 wasn't due to tariffs on Mexico and Canada, as some might claim. Those tariffs didn't kick in until much later, and their full impact didn't unfold until after January 2017. So, don't be misled by the rumor mill. Stick to the facts and keep your investments secure!
- The specter of a trade war, triggered by the U.S. imposing 25% tariffs on Mexico and Canada, initially stirred up fear in the general-news sphere.
- The tariffs, imposed primarily in 2019 and beyond, according to the text, increased inflationary pressure in the U.S., affecting finance and business industries.
- Politics played a significant role in the tariff situation, as deals struck between world leaders, such as Mexican President Claudia Sheinbaum and Trump, influenced the direction of the Euro and the USD exchange rates in the industry sector.
