Tokyo (TDI): Stock markets in the Asia-Pacific region made modest gains on Tuesday after President Donald Trump said he is thinking of imposing new tariffs on Canada, Mexico and China.
Shares were flat to a little higher after Trump vowed in his inaugural address to bring in a “golden age” for the US and stopped short of announcing fresh import taxes on his first day in office.
He has pledged an ambitious agenda – including trade reforms, lower taxes and cuts to government regulations – which has the potential to boost company profits.
But some economists have cautioned that the measures may also increase inflation, which in turn could force the Federal Reserve to raise interest rates.
“We’re thinking in terms of 25 percent on Mexico and Canada, because they’re allowing vast numbers of people, Canada’s a very bad abuser also, vast numbers of people to come in, and fentanyl to come in,” Trump stated in the Oval Office.
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In a presidential memo, he directed federal agencies to probe why America continues to import more goods than it exports as well as investigating potential unfair trade practices and alleged currency manipulation by other nations.
Trump also said new tariffs on China could depend on whether an agreement is reached over TikTok’s future.
If Beijing blocked such a deal “it would be somewhat of a hostile act”, he said.
But he added the United States is not yet ready to impose tariffs on all imports into the country.
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During the election campaign, Trump promised a universal tariff of 10 percent and said he would hit China with a 60 percent import tax.
He has said tariffs will make Americans richer, although critics argue the costs are likely to be passed on to consumers.
External Revenue Service
Trump has also said he would create an “External Revenue Service” to collect all tariffs, duties and revenues from foreign sources.
On Tuesday, Hong Kong’s Hang Seng was up by 0.8 percent, South Korea’s Kospi was flat on the day, Japan’s Nikkei 225 ended up by 0.3 percent and Australia’s ASX 200 closed 0.6 percent higher.
Meanwhile, the dollar regained some ground against some other leading currencies, including the pound and the euro.
