Currency Turmoil

Dollar Mixed as Mexican Peso and Canadian Dollar Drop on Auto Tariffs

The US dollar was mixed on Tuesday as the Mexican peso and Canadian dollar fell sharply in response to the Trump administration's proposal to impose tariffs on auto imports.

The peso dropped 1.1% to 19.15 per dollar, while the Canadian dollar fell 0.7% to 1.34 per dollar. The dollar index, which tracks the currency against a basket of six major rivals, was little changed at 96.77.

The tariffs, which would be imposed at rates of 25% and 10% respectively, are intended to protect the US automotive industry and address concerns about national security. However, they are likely to have significant economic implications for Mexico and Canada, which are the US's largest trading partners.

Mexico's economy is heavily reliant on trade with the US, and the country's peso is often seen as a proxy for the country's economic health. The currency's decline on Tuesday suggests that investors are growing increasingly concerned about the potential impact of the tariffs on Mexico's economy.

The Canadian dollar also fell sharply on Tuesday, as the country's currency is often closely tied to the US dollar. The decline in the Canadian dollar was largely driven by concerns about the potential impact of the tariffs on Canada's automotive industry, which is a significant employer and contributor to the country's economy.

The tariffs are expected to have a significant impact on the global automotive industry, and are likely to lead to higher prices for consumers. The Trump administration has said that the tariffs are necessary to protect the US automotive industry, but many economists argue that they will ultimately harm the industry by making it more difficult for companies to operate.

The US dollar was mixed against other major currencies on Tuesday, with the euro and Japanese yen both falling slightly against the dollar. The dollar was up 0.2% against the yen at 113.45, and down 0.1% against the euro at 1.13.