LONDON, Jan 8 (Reuters) - From China to Europe, Canada

to Mexico, world markets are already reeling from Donald Trump's

promise to jack up tariffs when he becomes U.S. president in

less than two weeks.

Trump has pledged tariffs of as much as 10% on global imports

and 60% on Chinese goods, plus a 25% import surcharge on

Canadian and Mexican products, duties that trade experts say

would upend trade flows, raise costs and draw retaliation.

The scale and scope remains to be seen, but the road ahead is

bumpy. Here's a look at some markets in focus right now.

1/ FRAGILE: CHINA

"China is likely to be the primary target of the Trump trade

wars 2.0," say Goldman Sachs. Investors are already getting

ahead, forcing the country's stock exchanges and central bank to

defend a tumbling yuan and stocks.

China's tightly controlled currency is at its

weakest in 16 months, with the dollar trading above the symbolic

7.3 yuan milestone which authorities had defended.

Barclays sees the yuan at 7.5 per dollar by end-2025, and

sliding to 8.4 in a scenario in which the U.S. imposes 60%

tariffs.

Even without tariffs, the currency has been hurt by a weak

economy pushing down Chinese government bond yields

-- widening the gap with elevated U.S. Treasury yields.

Analysts expect China to let the yuan weaken further to help

exporters manage the impact of tariffs, but gradually.

A sudden plunge would bring lurking fears of capital

outflows to the fore, and jolt confidence, already bruised after

stocks just saw their biggest weekly fall in two years.

Investors in other major Asian exporters such as Vietnam and

Malaysia are also nervous.

2/ EURO'S TOXIC MIX

The euro has slid over 5% since the U.S. election,

the most among major currencies, to two-year lows around $1.04.

JPMorgan and Rabobank reckon the single currency could

fall to the key $1 mark this year, as tariff uncertainty

weighs.

The U.S. is the European Union's most important trading partner,

with $1.7 trillion in two-way goods and services trade.

Markets anticipate 100 basis points of European Central Bank

rate cuts this year to bolster a lackluster economy. But

traders, speculating that tariffs could boost U.S. inflation,

anticipate just 40 bps of Fed rate cuts, enhancing the dollar's

appeal over the euro.

A weakening Chinese economy also hurts Europe.

Tariffs hitting China and the EU at the same time could be a

"very toxic mix for the euro", said ING currency strategist

Francesco Pesole.

3/ CAR TROUBLE

In Europe, auto stocks are also particularly sensitive to

tariff-headlines.

On Monday, a basket of auto names briefly shot up almost

5% on a Washington Post report that Trump aides are exploring

import duties only for critical imports but then fell as Trump

denied the article.

The swings highlight investors' touchiness on an

already-depressed sector that has seen its shares shed a quarter

of their value since an April 2024 peak and their relative

valuations plunge.

Barclays' head of European equity strategy Emmanuel Cau said

autos are among the trade-exposed, consumer sectors he is

watching. Others include staples, luxury goods and industrials.

A Barclays basket of the most tariff-exposed European stocks

is down about 20%-25% relative to the main market in the past

six months.

Euro zone economic weakness could also prolong European

equities' underperformance. The STOXX 600 rose 6% in

2024, while the S&P 500 index surged 23%.

4/ GOING LOONIE

Canada's dollar is near its weakest in over four years,

having fallen sharply after Trump in November threatened a 25%

tariff on Canada and Mexico until they clamped down on drugs and

migrants.

It has potential to fall further. Goldman analysts reckon

markets may only be pricing about a 5% chance of such a tariff,

and while they think this is unlikely to materialise, prolonged

trade talks could keep risks alive.

A fully-fledged trade war necessitating additional Canadian

rate cuts could push the loonie to the 1.50 mark against the

U.S. dollar, said ING's Pesole. That would imply a further

weakening of almost 5% from around 1.43 now.

Canadian Prime Minister Justin Trudeau's resignation further

complicates the outlook.

5/ VOLATILE PESO

The Mexican peso was already down 16% against the dollar in

2024 when Trump was elected, so a lot of news - both good for

the dollar and bad for the peso - was priced in.

The peso's 2024 performance, a 18.6% drop, was its

weakest yearly showing since 2008. Besides the threat of tariffs

from the U.S. - the destination of 80% of Mexico's exports - a

controversial judicial reform also affected the currency.

Monday's tariff news, later denied by Trump, sent the peso up as

much as 2% before it pared gains, highlighting that volatility

may continue as trade along the U.S. southern border remains a

target for the President-elect.