Wayne Cole

SYDNEY (Reuters) – The dollar rebounded on Tuesday in choppy Asian trade after U.S. President Donald Trump suggested the United States could impose tariffs on Canada and Mexico in the near future, although details were rare.

Trump was quoted as saying his team was considering tariffs of around 25%, which could be announced on February 1, but gave no other details.

The comments came as a surprise, given that officials had previously signaled that any novel taxes would be imposed in a “measurable” way, providing significant relief for trade-exposed currencies. The note below merely directs agencies to investigate and fix persistent trade deficits.

A tariff of “25% seems high for a start and markets have responded quickly, especially in the foreign exchange market,” said Shoki Omori, the company’s chief global strategy officer Mizuho (NYSE:) Tokyo Securities.

“I think market participants thought Trump would start with China, with, say, 10% to 20% tariffs on goods, but gradually increase them.”

The market reacted with a pointed decline in the value of the Canadian dollar and Mexican peso, which helped the dollar recover from Monday’s losses. The dollar rose 1.2% to 1.4475 Canadian dollars, while adding 1.3% to the peso.

The stock rebounded 0.6% to 108.65, after losing 1.2% overnight, its biggest daily loss since behind schedule 2023.

The euro fell to $1.0364 from an early high of $1.0434. The EU runs a huge trade surplus with the United States and is seen as a major target of Trump’s tariffs.

The dollar gained 0.3% against the Japanese yen to 156.06, after earlier touching a five-week low of 154.90.

The yen gained ground last week on rising expectations that the Bank of Japan will raise interest rates at its monetary policy meeting on Friday.

The dollar also gained 0.3% to 7.2847. Trump has threatened China with tariffs of up to 60% in the past.