Daily Pulse
One of our most accessible tools, this daily comment keeps you abreast of developments on the North American and international financial markets.
Michel Doucet
Vice-President and
Portfolio Manager
January 21, 2025
Canada
President Donald Trump said he planned to impose previously threatened tariffs of as much as 25% on Mexico and Canada by Feb. 1, reiterating his contention that America’s two immediate neighbors are letting undocumented migrants and drugs flood into the country.Trump’s plans for tariffs on two nations vital for US energy and auto imports threatens to set off a trade war among the signatories of the US-Mexico-Canada Agreement, the successor to Nafta negotiated at Trump’s insistence during his first term. The pact governed the flow of $1.8 trillion in goods and services trade, based on 2022 data. The additional levies would hit about $97 billion worth of auto parts and 4 million finished vehicles that come into the US from those countries, and could boost average new-car prices by about $3,000, according to Wolfe Research. Both Canada and Mexico have said they’d retaliate against American goods if Trump slaps tariffs on them. The USMCA is up for review in 2026. The Canadian dollar and Mexican peso fell as much as 1.4% each against the greenback on the news.
United States
Trump wasted no time announcing steps to implement many of his campaign pledges, declaring national emergencies on migration and energy, touting a more aggressive stance abroad and implementing a federal hiring freeze. He pledged to revoke 78 of Joe Biden’s executive orders, withdrew from the WHO and the Paris Agreement, and temporarily halted a ban on TikTok in the US.Trump signed an order seeking to end automatic birthright citizenship for children of people not in the country legally. Immigration advocates sued.
Donald Trump moved moved to fulfill campaign pledges to end birthright citizenship and mobilize troops to step up border enforcement as part of a broader crackdown, Trump also targeted the app used by hundreds of thousands of migrants to cross the border and ask for asylum. A message showed it was “no longer available, and existing appointments have been cancelled.” That dashed the hopes of migrants waiting in Mexico for appointments with US authorities, with many left stranded far from their home countries with few viable methods for crossing into the US legally. Trump has repeatedly said he will focus his deportation efforts on criminals and those who are a threat to public safety or national security, but his order ending asylum opens the door for authorities to arrest and possibly deport millions of foreigners who have been allowed to live in the US while a court decides their fate.
Europe
The ECB will probably cut rates 3-4 times in a row, with the first reduction all but certain next week, Governing Council member Peter Kazimir said. Francois Villeroy said it’s plausible the central bank will act at each meeting, bringing the deposit rate down to 2% by summer.
Asia
Trump did not announce tariffs on China on his first day in office, causing a temporary boost in Chinese stocks. Investors remain uncertain and are bracing for potential volatility in the days ahead, with some advisors recommending caution on investing in Chinese stocks. Expectations of tariffs and trade tensions with China continue to dominate market moves, with Trump's unpredictability on policies expected to cause volatility spikes in the future. Hopes for an easing of Sino-American tensions have been rising following a phone call between Trump and Chinese President Xi Jinping last week, which the US leader described as “very good.”
There was some relief in Chinese markets as Trump fell short of announcing immediate levies against the world’s second-largest economy. An index of Chinese stocks traded in Hong Kong rose 1%, while gauges in the mainland fluctuated. The offshore yuan slipped 0.2%, but held on to most of its Monday rally.