Morning wrap (21.01.2025)

We begin the first day after the inauguration of the 47th President of the USA, Donald Trump. Financial markets start the day in somewhat nervous moods following the initial decisions made at the White House.

Donald Trump signed a long list of executive orders yesterday. Speculations were also confirmed that no orders regarding tariffs would be signed in the first phase. However, the President outlined several ideas about what could be done with tariffs.

In the evening, in the Oval Office, Trump stated that his administration would impose a 25% tariff on Mexico and Canada on February 1. This is a significant move, as Mexico and Canada are two of America’s three largest trading partners.

Last year, imports to the USA from Mexico amounted to over $470 billion, while imports from Canada were close to $420 billion.

Such a move by the USA increases the likelihood that both countries will impose retaliatory tariffs on American goods, potentially harming domestic businesses.

Moreover, China could also face serious tariffs if an agreement on the acquisition of TikTok is not reached.

In response to these announcements, extraordinary volatility is being observed in the currency market. The two weakest currencies are the Mexican peso and the Canadian dollar. Meanwhile, the US dollar is partially recovering losses from the previous day before the inauguration. At the time of publication, USDMXN is gaining 1.36%, and USDCAD is up nearly 0.95%.

Indices from the Asia-Pacific region are trading with weaker sentiment. Chinese indices are recording losses in the range of 0.50–0.80%. The Japanese stock market is up 0.05%, the Singaporean SG20cash index is down 0.30%, and the Australian AU200cash index is the only one gaining, up 0.35%.

Among the most important executive orders signed yesterday by Donald Trump, we can highlight:

• Department of Government Efficiency: Creation of a new department headed by Elon Musk to improve government efficiency.

• Reversal of Biden-era policies: Trump rolled back 78 executive actions from Biden's term, including measures related to diversity and equality for LGBTQ individuals.

• Paris Climate Agreement: Withdrawal of the United States from the 2015 agreement, reversing the rejoining during Biden’s term.

• World Health Organization (WHO): Ordered the U.S. to exit the WHO, citing unfair financial contributions.

• Immigration policy: Declaration of a state of emergency at the country’s border and introduction of restrictions on birthright citizenship.

• National energy emergency: Trump declared an energy emergency, expanding drilling and fossil fuel exports.

• Gender policy: Limitation of federal recognition to two genders, reversing Biden’s protections for gender identity.

• TikTok Ban: Trump postponed the enforcement of the federal TikTok ban for 75 days to reassess its consequences.

• Change in Electric Vehicle Standards: Reversal of Biden's goals for electric vehicles and automotive pollution standards.