The dollar gained and investors sold off stocks after the president-elect promised to levy new restrictions on the United States’ biggest trade partners.

The popular wisdom had become that he wasn’t really that serious, and the key bit of evidence for that was his nomination of hedge fund investor Scott Bessent as his Treasury Secretary, someone seen as a moderate when it came to tariffs compared with others whose names were floated for the role.

The president-elect will waste little time in making good on his campaign promise, pledging to impose 25% levies on Mexico and Canada on his first day back in the White House.

The euro gained on Tuesday after Europe escaped the latest round of Donald Trump’s trade tariff threats and as investors positioned for what historically has been the strongest month for the currency.

Trump said in a post on Truth Social that on his first day in office he would impose a 25% tariff on all products from Mexico and Canada, and an additional 10% tariff on goods from China, citing concerns over illegal immigration and the trade of illicit drugs.

Donald Trump's plans could spark trade wars, fuel volatility, reignite inflation, and spur a flight to safety in markets, analysts said.

The episode conjures uncomfortable memories for markets that have got used to reacting to scheduled events such as Fed policy announcements and monthly payrolls reports during Joe Biden's tenure as president. Now, investors must brace for market-moving Trump posts at any hour, like during his first term in office.

Donald Trump promised steep import tariffs that would be particularly painful for carmakers manufacturing in countries such as Mexico and Canada for the U.S. market.