BENGALURU: The Mexican peso sank to a more-than-two-year low on Tuesday, while Asian currencies also retreated after the US dollar rallied following US President-elect Donald Trump’s pledge to slap big tariffs on the country’s biggest trading partners.

Trump, who takes office on Jan. 20, 2025, said he would impose a 25% tariff on imports from Canada and Mexico and outlined “an additional 10% tariff, above any additional tariffs” on imports from China.

The Mexican peso slumped as much as 2.3% to near its lowest since August 2022, before easing to trade down 1.7% as of 0745 GMT. The US dollar rose to a four-and-a-half-year high against the Canadian dollar.

In Asia, the greenback rose to its highest level since July 30 against China’s yuan. However, the biggest losers were the Malaysian ringgit and Indonesian rupiah, falling 0.4% each.

The peso had a kneejerk reaction lower but thin liquidity outside the North American time zone may have contributed to the outsized moves in Asia, said Alex Loo, an FX and Macro strategist at TD Securities, Singapore.

The Thai baht fell up to 0.4%, with analysts flagging concerns around the export-focussed country’s widening trade deficit with China.

Thailand’s bilateral goods trade deficit with China has steadily increased to hit $36.7 billion in 2023 from $10.49 billion in 2013.

China is also a leading source of foreign direct investment and tourism receipts for Thailand and Trump’s tariffs on Mexico could have implications for goods exported through the Southeast Asian country.

“The authorities will need to strike a delicate balance between protecting domestic firms and jobs and establishing mutually beneficial ties with Chinese firms,” Maybank analysts said.