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How Tariffs on Imports Are Shaping Currency Trends: Insights for Proprietary Traders

Jan 28, 2025
How Tariffs on Imports Are Shaping Currency Trends: Insights for Proprietary Traders

The new US President has assumed office on 20th Jan 2025 and the important announcement from his initial set up is on changes on Tariffs on imports specifically from Mexico and Canada. This has been a talking point since the election results were announced. So let's have a close look at how these events impact the Prop Trading Firms and the traders.

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Volatile Market Movements

As the actions from the government start rolling out and information is processed the volatility in markets will remain on a higher level. As a proprietary trader, one must keep the risk management levels in a favorable condition. Do the market research right, avoid overtrading and seek the advice of a trading coach if needed. Volatile markets provide good opportunities for entry and exit at a preferred price for a trader.

Dollar to Strengthen

Now the whole focus will be to make the US more economically stronger and this will help in further strengthening the dollar. With increase in global currency ranking the impact on major forex pairs shall be significant. As a Prop Trading strategy, always keep a close eye on the moves by the new government and its long term impact on the import and export by different countries.

Canadian Dollar and Mexican Peso

With a clear indication of tariff on imports from Canada and Mexico, the impact on these forex pairs is inevitable. These forex currency pairs will not only see pressure, their economies will impact and in turn the demand and supply. Traditionally USD has been a driving factor of CAD and Peso hence the domestic economic conditions will be severely impacted.

US Domestic Inflation

The tariff implementation is a double edged sword and will have an impact on US GDP as well. These tariffs may help the government earn more but will be driving inflation northward. The Fed will keep a close eye on the inflation numbers once the tariffs are decided and in turn will drive the interest rates. As per the last update Fed will try to keep interest rates stable in 2025. This will have a cascading effect on the US firms that are exporting to other countries and their currency demand. 

Trade Relationship

With the new regime a revised trade agreement will be enforced between Canada, Mexico and the US companies. For years their domestic economies have been dependent on each other and may lead to straining of relationships between these countries. While Canada is battling with political instability on the back resignation of Mr. Trudeau, they now have to pick a new regime of US trade changes. These conditions will further trickle down to the US economy as well since they depend on lot imports from these two countries. 

Conclusions

From a Prop Trading Strategy perspective, Forex, Commodities and Crypto markets will be reacting in a volatile manner to these changes. The impact on the Asian and European Markets is visible with a volatile situation and Cryptos in particular have been left out in the early speech of Mr. Trump creating further stress on traders for a while. Though the long term story of good domestic consumption still looks intact and pro US policies will support the Crypto ETF supposedly with new faces in CFTC Caroline D. Pham and Jerome Powell  at Fed will be closely monitoring the situation. The Bitcoin ETF will play a crucial role in the current situation and not to mention the prices of DOGE will be an interesting area to watch out for. The prop trading challenges allow you access the market and take advantage of the leverage and technology that is being provided by them. Finally for a good prop trading structure, prepare a good training plan, carefully study the market, have a strong risk management in place till the time the whole situation is stabilized.

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Disclaimer: All information provided on this site is for educational purposes only, related to trading in financial markets. It is not intended as financial advice, business or investment recommendation, or as an opportunity or recommendation to trade any investment instruments. Hola Prime only provides an educational environment to traders, including tools, materials and simulated trading platforms which have data feed provided by Liquidity Providers. The information on this site is not directed at residents in any country or jurisdiction where such distribution or use would be contrary to local laws or regulations.

About the Author: Sam Saleh

Sam Saleh, a London-based trader, began his trading journey at 19 while studying Business at the University of Bedfordshire. With expertise in trading and a background in marketing, he now coaches at Hola Prime, where he develops educational content aimed at building trader confidence, consistency, and financial literacy.

Disclaimer

All information provided on this site is for educational purposes only, related to trading in financial markets. It is not intended as financial advice, business or investment recommendation, or as an opportunity or recommendation to trade any investment instruments. Hola Prime only provides an educational environment to traders, including tools, materials and simulated trading platforms which have data feed provided by Liquidity Providers. The information on this site is not directed at residents in any country or jurisdiction where such distribution or use would be contrary to local laws or regulations.

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