1/17/2017 Investor’s Business Daily
Threats of a trade war intensified over the weekend, as President-elect Donald Trump said the dollar “is too strong” and warned BMW that it would face a 35% tariff on imports to the U.S. from a plant it’s building in Mexico.
Trump’s words help sink the U.S. dollar index by 1% vs. other major currencies on Tuesday. Meanwhile, gold prices rose 1.6% to $1,215 an ounce and the 10-year Treasury yield slipped as low as 2.33%, the lowest level since November 29. Following similar threats of a “big border tax” aimed at Ford, General Motors, and Toyota, Mexico’s economy minister Ildefonso Guajardo indicated the country was preparing to strike back.
“It is clear we need to be prepared to immediately neutralize the impact of such a measure,” he said in a Friday interview on Mexican TV. Guajardo added that Trump’s plan to counter the competitive advantage of low-cost countries with tariffs would lead to a global recession.