Trump Imposes Tariffs; Dollar Surges on New Tariffs
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Good morning, I'm Nathan Hager. And I'm Karen Moscow. Here are the stories we're following today. Karen, we are seeing a sharp sell-off in stocks around the world, with President Trump set to follow through on his threat of tariffs against America's closest trading partners. On Saturday, the president announced 25% duties on products from Canada and Mexico and 10% on China, starting just after midnight tonight. Trump admits American consumers might take a hit.

short-term, some little pain, and people understand that. But long-term, the United States has been ripped off.

by virtually every country in the world. We have deficits with almost every country. Not every country, but almost. And Republican lawmakers are signaling they support the president's efforts. Senator Lindsey Graham had this reaction on Fox News Sunday. If you want tariffs to go away in Mexico and China, stop poisoning Americans. Stop sending fentanyl into America to kill Americans. If you want to have a better relationship in Mexico with the United States, do your part on the other side of the border.

But Democratic Senator Mark Warner says tariffs amount to what he calls a Donald Trump Super Bowl tax less than a week before the big game. Remember Donald Trump got hired trying to lower, saying he was going to lower grocery prices. Right. Two weeks in, he's doing something that's going to do the absolute opposite. Senator Warner spoke to CBS's Margaret Brennan on Face the Nation, and you can hear both Face the Nation and Fox News Sunday every Sunday on Bloomberg Radio.

Well, Nathan, Trump says he will have separate calls this morning with Canadian Prime Minister Justin Trudeau, as well as with the Mexican leadership. The Canadian leader has already pledged 25 percent retaliatory tariffs on $107 billion worth of U.S. goods. Trudeau says Trump's action now risks job losses and price rises for Americans.

If President Trump wants to usher in a new golden age for the United States, the better path is to partner with Canada, not to punish us. Canadian Prime Minister Justin Trudeau. Other Canadian officials announced their own measures. David Eby, the premier of British Columbia, directed a provincially owned liquor distributor to remove some alcohol brands made in Republican-led states from the shelves of retail stores.

and to cease further purchases. Well, as you mentioned, Karen, the peso is dropping to its lowest level in almost three years. Mexican President Claudia Sheinbaum says she'll set out her response to U.S. tariffs later today. She says she hopes a resolution can be found quickly. Sovereignty is not negotiable. To this end, yesterday in my statement, I proposed to President Trump that we establish a working group. It is not with the imposition of tariffs that the problems are resolved.

but speaking and dialoguing as we did. Mexican President Claudia Sheinbaum spoke there through an interpreter. President Trump has said he may escalate U.S. tariffs further in response to any retaliations.

Well, Nathan, China's reaction to Trump's tariffs, which come in the middle of Lunar New Year holiday celebrations, has been more muted. The country's Commerce Ministry issued a statement expressing strong dissatisfaction and vowing corresponding countermeasures without elaborating. Our chief North Asia correspondent Stephen Engels says China's reaction could yet ramp up. This is going to be a protracted process. So Beijing has to process exactly what's going to be the end result.

result of tariffs? Is it going to go up to 60 percent? It's 10 percent right now. And there's going to be an economic impact of that. And I think right now, especially as they're coming out of the long Lunar New Year holiday, kind of crafting their message, obviously.

And that's Bloomberg's Stephen Angle reporting from Hong Kong. And after he announced those duties on China, Mexico and Canada, Karen, President Trump also ramped up threats to the European Union, citing that bloc's large surplus with the U.S. It will definitely happen with the European Union. I can tell you that.

because they've really taken advantage of us. And, you know, we have over a $300 billion deficit. They don't take our cars. They don't take our farm products. They take almost nothing. And we take everything from them -- millions of cars,

Tremendous amounts of food and farm products. President Trump's remarks came after an EU spokesperson said the bloc would respond firmly to any trading partner that unfairly or arbitrarily imposes tariffs on EU goods. Well, Nathan, President Trump's tariffs against Canada and Mexico may result in consumers paying more for cars. And we get that angle of the tariff story with Bloomberg's John Tucker and John Voskos.

How much are we talking about here? Well, Karen, research from automotive consultant Alex Partners says the tariffs will add $60 billion in cost to the auto industry, a lot of which likely to be passed on to consumers. Wolf Research Analysts have said the average price of a new car may climb by about $3,000.

The duties would immediately hit almost a quarter of the 16 million vehicles that are sold in the U.S. every year, as well as the parts and components that go into them. Now, car components can make their way back and forth across U.S. borders as many as eight times during the production of the car. Automakers in Mexico, they've been preparing by preemptively importing both more components and vehicles that

could ease the blow in the first few weeks but flavio volpe he's the president of canada's automotive parts manufacturers association predicts his words now the auto sector is going to shut down within a week this morning shares of gm down seven percent stalantis is off almost six percent and ford is down four percent

John Tucker, Bloomberg Radio. John, thanks. Now the latest on another hot-button issue for President Trump, Panama. It's now promising free passage for U.S. warships through the Panama Canal and also says it will withdraw from China's Belt and Road Initiative, making Panama the first Latin American country to do so. The concessions came after Secretary of State Marco Rubio visited Panama over the weekend. Over time, the relationship had its ups and downs, and today it's one of our strongest economic partners, certainly in the hemisphere.

and an important catalyst for so much trade and commerce that happens in the United States that affects and impacts so many people, both going out and coming in. And that was Secretary of State Marco Rubio speaking over the weekend. The U.S. built the Panama Canal at the start of the 20th century and seeded it back in 1999 under a treaty signed by President Jimmy Carter in 1977.

Nathan, we're also learning more about Elon Musk's plans for government efficiency. He's sketching out plans for aggressive cuts that include wiping out the U.S. Agency for International Development. Musk said he has the president's blessing to end the U.S. Agency for International Development and fold what's left into the State Department. The Tesla CEO says this move from his Doge initiative should instill confidence in the Treasury market.

Well, let's check the markets once again, Karen. If stocks are falling, the dollar is rallying after President Trump imposed tariffs on Canada, Mexico and China. The dollar is up to its highest level in more than two years, checking it against the euro. Right now, the euro is at 1.0237, down 1.2%. The Mexican peso down 2%.

while the Canadian dollar is weaker against the U.S. dollar by about 1%. Futures are sliding. The S&P futures down 1.6%. Dow futures 1.4% lower. And Nasdaq futures on the decline by 1.8%. Oil is rallying. NYMEX crude's up 2.5%, $74.32 a barrel. And Bitcoin is falling as well, down 1.8% at about $95,300.

Well, Nathan, earnings will also be in focus this week as two more members of the Magnificent Seven report quarterly results, and Bloomberg's Tom Busby has a preview. Google Parent Alphabet out with earnings this Tuesday. It's expected to see revenue grow double digits thanks to ad sales on its Google search engine, growth in its services and cloud computing, and advancements in its generative AI capabilities, also expanding its Waymo robo-taxi business to more cities. On Thursday, we hear from Amazon. It's expected to benefit from a

burst of consumer spending ahead of the holidays and ahead of tariffs imposed by the Trump White House. Also, solid revenue from its Amazon Web Services cloud division. I'm Tom Busby, Bloomberg Radio. Time now for a look at some of the other stories making news in New York and around the world. And for that, we're joined by Bloomberg's Michael Barr. Michael, good morning. Good morning, Karen. Authorities say they have recovered the remains of 55 of the 67 people killed in last week's plane crash in the nation's capital.

John Donnelly of the Washington, D.C. Fire and EMS Department says they are committed to the dignified recovery of remains as they prepare to lift wreckage from the Potomac River as early as this morning. Donnelly also says he has spoken with the families and kept them informed of the timeline and the operations as they work. They are a strong group of families that are focused on getting their loved ones back and

and I think that's the appropriate place to be at this point. Officials in Philadelphia have now located the black box of the medical flight that crashed in a crowded city neighborhood Friday night. All six people on the plane were killed and one person on the ground also died. At least 22 people now reported injured, including three in critical condition.

Mayor Sherelle Parker says federal, state, and local investigators have been working around the clock at the scene. This remains an ongoing investigation. The situation is fluid and it is active. The plane was on its way to Missouri and was only in the air for a short time before it crashed. Beyonce finally won her Grammy. That has eluded her. She won Album of the Year, the 67th Grammy Awards last night for the country music song Cowboy Carter.

I just feel very full and very honored. It's been many, many years.

Audio courtesy of CBS Recording Academy. Global news 24 hours a day and whenever you want it with Bloomberg News Now. I'm Michael Barr and this is Bloomberg. Karen. All right, Michael Barr, thank you. With Amex Business Platinum, your dental clinic can really sparkle. With a flexible spending limit that adapts with your business, that's the powerful backing of American Express. Not all purchases will be approved. Terms apply. Learn more at AmericanExpress.com slash AmexBusiness.

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Time now for the Bloomberg Sports Update brought to you by Tri-State Audi. Here's John Stashower. John, good morning. Good morning, Karen. The NBA trade deadline, not until Thursday, but what a weekend it was. Saturday night brought the stunning blockbuster Luka Doncic to the Lakers, Anthony Davis to Dallas. Last night, not to that level, but De'Aaron Fox and Zach Levine, good players who've been all-stars. And Fox was moved from Sacramento to San Antonio. Levine goes from Chicago to Sacramento. Meanwhile, Doncic released a statement that said...

He thought he'd spend his entire career in Dallas every one day. Last season, Donsitz averaged 34 points a game, nine rebounds and 10 assists, and he led the match to the NBA Finals. So why trade him? The Dallas General Manager is Nico Harrison.

You know, there's some unique things about his contract that we had to pay attention to. You know, there's other teams that were loading up, you know, that he was going to have, he was going to be able to decide to make his own decision at some point of whether he wants to be here or not, whether we want to supermax him or not, or whether he wants to opt out. So I think we had to take all that into consideration and

I feel like we got out in front of what could have been a tumultuous summer. Longtime Mavs owner Mark Cuban no longer the majority owner. He was not involved in the decision to trade Donson. Jet the Garden Rangers, three goals in the third period, beat Vegas 4-2. The Islanders' seven-game winning streak came to an end in Florida 6-3. The Devils and Buffalo fell behind early 3-0, lost 4-3. For the third time in the last four years, Rory McIlroy's first tournament of the year, a victory, his first ever win at Pebble Beach, finished 21 under par.

1-2 over Shane Lowry. They both had holes in one in the opening round. Former baseball commissioner Faye Vinson has passed away at 86. John Stascheller, Bloomberg Sports. Karen and Nathan.

Coast to coast on Bloomberg Radio. Nationwide on Sirius XM. And around the world on Bloomberg.com and the Bloomberg Business App. This is Bloomberg Daybreak. Good morning, I'm Nathan Hager. President Donald Trump's promise of tariffs on America's closest trading partners is rippling through markets. After announcing 25% duties on Canada and Mexico and 10% on China, the president says the European Union is next.

They don't take our cars. They don't take our farm products. They take almost nothing. And we take everything from them. The president spoke to reporters outside Washington last night. Joining us this morning from the nation's capital, Terry Haynes, the founder of Pangea Policy. As we watch stocks sell off and the dollar rally this morning, Terry, should the market have seen this coming? Good morning.

Hi, good morning, Nathan. And yes, I think they should have. Markets have spent the last few months talking themselves into a gradualist or even, you know, this isn't happening, it's all negotiation stance. And yes, it is negotiation, but it's negotiation based not from a trade war perspective, but I think from an overall conflict perspective, a broader geopolitical context, among others.

So what is the chance then, Terry, that the president actually does follow through on these? He announced they're going to kick in just after midnight tonight. At the same time, he's saying that he will have discussions with Canada and Mexico today. I think the markets should assume that some tariffs are coming. I think the size and shape are still very much up in the air, and markets are going to have to get used to volatility here, frankly, in the realm of political decision-making.

My instinct, and it is only instinct, is that it's not at all beyond the question that the tariffs go in as announced. It's also not beyond the question that they go in with some lowered modifications. One way you can look at this is Trump testing the markets on reaction, and he's also testing politically the reaction of our border partners, China,

to do specific things to actually improve the border and stop the flow of fentanyl. Is this a test on fellow Republicans as well? It is to some extent, yes. But I think it's – and so far they've been supportive. But what you've got to remember over the last decade, and it's been a decade since tariff policy became part of geopolitical policy in the United States, is that Congress has supported the means in which the how –

Trump imposes these tariffs, whether it was Trump one, whether it was Biden, and then now whether it's Trump two. Congress supports the how. There will be some dissent on the when or why that's rooted as much in partisan politics as anything else. But there's not going to be any serious move to try to stop Trump from doing any of these things.

Do you think there are any further concessions that Canada or Mexico could make after the concessions that they've said that they have made even before the president announced these duties over the weekend?

My unsolicited advice to those countries is very simple, is that you get as specific, if they want to stop the tariffs, you get as specific and talk about how well and how much you can partner as possible. Trump realizes, I think, unlike the first, that he's going to need support from his border partners and very much wants those things.

And in just 30 seconds, is this about partnerships? Is this about the fentanyl and immigration flows? Or is this more about the trade deficits?

I think it's about both, but at root, Trump always says that his top priority is securing the border, and I think you have to take the border strategy both seriously and literally as part of the broader geopolitical strategy and the broader economic strategy, which are out there, which exist, even if they're being ignored by markets today.

This is Bloomberg Daybreak, your morning podcast on the stories making news from Wall Street to Washington and beyond. Look for us on your podcast feed by 6 a.m. Eastern each morning on Apple, Spotify, or anywhere else you listen. You can also listen live each morning starting at 5 a.m. Wall Street time on Bloomberg 1130 in New York, Bloomberg 99.1 in Washington, Bloomberg 92.9 in Boston, and nationwide on Sirius XM Channel 121.

Plus, listen coast to coast on the Bloomberg Business app now with Apple CarPlay and Android Auto interfaces. And don't forget to subscribe to Bloomberg News Now. It's the latest news whenever you want it, in five minutes or less. Search Bloomberg News Now on your favorite podcast platform to stay informed all day long. I'm Karen Moscow. And I'm Nathan Hager. Join us again tomorrow morning for all the news you need to start your day right here on Bloomberg Daybreak.

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