LONDON, Feb 1 — Wall Street stocks slipped and the dollar gained yesterday after President Donald Trump announced tariffs on Canada, Mexico and China, capping a volatile week for markets.

The US will impose 25 per cent tariffs on Canada and Mexico, along with 10 per cent on China, White House spokeswoman Karoline Leavitt said yesterday, but she declined to say whether there will be exemptions. Reuters earlier quoted sources saying that Trump would delay collection of the duties until March 1 and offer a limited process for certain imports to be exempted.

Wall Street shares reversed yesterdat to finish in negative territory. The Dow Jones Industrial Average ended down0.75 per cent, the US S&P 500 stock index lost 0.5 per cent, and the tech-heavy Nasdaq dropped 0.3 per cent.

“As was the case for Monday’s AI news, it remains to be seen how the markets will absorb this development on a longer-term basis,” Daniel Skelly, head of Morgan Stanley’s Wealth Management Market Research & Strategy Team, said in an email. “This week has been a reminder of how unexpected events can quickly shift market perceptions.”

The Nasdaq had lost 2.9 per cent on Monday as the surging popularity of cheap Chinese AI model DeepSeek shook investor confidence in US tech stocks and sent chipmaker Nvidia plunging 17 per cent. But earnings reports and forecasts this week from Meta and Tesla helped sentiment recover somewhat.

Apple initially added to the cautiously optimistic mood late on Thursday when it forecast relatively strong sales growth, but its stock fell about 0.7 per cent yesterday.

European shares closed at a record high, led by technology stocks, as earnings from companies such as Novartis and Hexagon overshadowed concerns over economic recovery.

Tariffs loom

In currency markets, the dollar index, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.25 per cent

The Canadian dollar lost 0.26 per cent and the peso was 0.24 per cent higher in choppy trading.

Trump is threatening punitive duties if Canada and Mexico do not take stronger action to halt the flow of the deadly opioid fentanyl and precursor chemicals into the US, as well as illegal migration. Goldman Sachs economists have estimated that across-the-board tariffs on Canada and Mexico would imply a 0.7 per cent increase in core inflation and a 0.4 per cent hit to gross domestic product.

“There is big market complacency in terms of the manner that the market could digest the tariffs,” Michael Nizard, multi-asset chief investment officer at Edmond de Rothschild, said earlier yesterday.

The euro and sterling both declined about 0.1 per cent versus the dollar.

Data yesterday showed the US personal consumption expenditures price index rose 0.3 per cent last month after an unrevised 0.1 per cent gain in November, in line with economists’ expectations.

“Disinflation continues, and should continue given underlying trends,” David Alcaly, lead macroeconomic strategist at Lazard Asset Management, said in an email.

“Concerns about recent bumpiness are overblown and have more to do with the potential for inflationary policy change like tariffs than with current conditions.”

Benchmark 10-year Treasury yields jumped following the Trump tariff plans and were last up 3.7 basis points to 4.549 per cent.

Data on Thursday showed US economic growth slowed in the fourth quarter, but remained robust enough for investors to expect the Federal Reserve — which held interest rates on Wednesday — to lower borrowing costs only gradually this year.

Euro zone short-dated government bond yields were on track to record their biggest weekly drop in months, after a raft of weak economic data led traders to ramp up their bets on future rate cuts from the European Central Bank. The ECB cut rates on Thursday and signalled more easing was coming.

Oil prices eased yesterday and closed the week lower. Brent crude futures for March, which expire on Friday, settled down 11 cents at US$76.76 a barrel.

Gold prices surpassed the key US$2,800 mark for the first time yesterday, fuelled by a rush to safety. — Reuters