DONALD Trump yesterday declared trade war on US neighbours, sending the dollar soaring.
He revealed plans for 25 per cent tariffs on Mexican and Canadian goods.
The President-elect said he would implement the policy from day one until the countries stop the flow of illegal drugs and migrants into America.
The dollar rose against the Mexican peso and Canadian dollar as Mr Trump also vowed to levy an extra ten per cent on imports from China when he returns to the White House.
His announcement on his Truth Social site saw Britain and Europe spared of his pledge to protect US manufacturing.
But fearful British ministers were reportedly drawing up retaliatory levies on the import of Jack Daniel’s whiskey, Levi’s jeans and Harley-Davidson bikes.
Trade Secretary Jonathan Reynolds insisted Britain is prepared for “all eventualities”.
He said: “Yes, it’s true to say if any country imposed tariffs on UK companies exporting, it would hurt our companies.”
The FTSE 100 slumped yesterday — with the London index falling 33.07 points to 8,258.61.
The Mexican peso dropped to its weakest since 2022 while the Canadian dollar hit a four-year low against the US dollar.
But about the tariffs, bank ING warned: “Our research shows they could cost US consumers up to $2,400 per capita annually.”
U.S. tariffs on Mexico and Canada may force Brit firms such as drinks giant Diageo to raise prices to recover costs.
Diageo, owner of tequila brands Don Julio and George Clooney’s Casamigos — both made in Mexico — lost almost £1billion of value yesterday.
Whisky brand Crown Royal, made in Canada, accounts for a fifth of Diageo’s US sales.
Price rises for US consumers could also trigger a ripple effect of hikes for Brits.
