US President Donald Trump signed executive orders to impose a 25% tax on steel and aluminium imports starting March 12, targeting key trading partners Mexico, China, and Canada. These nations accounted for 42% of total US imports in 2024, with Mexico leading the export charge to the US at $466.6 billion. The move aims to bolster the US economy and support American producers, though it has sparked concerns across global markets.
Australia is actively seeking exemptions from the new tariffs on steel and aluminium, hoping to avoid the economic repercussions. However, Peter Navarro, a trade adviser to President Trump, criticized Australia for "killing the aluminium market," casting doubt on their exemption prospects. The impact of these tariffs is already being felt in the financial markets, with the S&P 500 and Eurostoxx 50 index expected to open lower due to caution among investors.
The tariffs, functioning as customs duties on certain merchandise imports or product categories, have sparked debate among economists. One school of thought supports tariffs as a means to safeguard domestic industries and promote economic growth, while the other views them as potential impediments to free trade and global economic integration.
Global stock markets initially shrugged off tariff fears, but futures markets showed signs of decline as the tariffs took effect. The Australian Dollar (AUD) experienced selling pressure against the US Dollar (USD), with the AUD/USD pair dropping 0.07% to trade at 0.6292. Despite this, the pair is regaining upside traction, nearing the significant 0.6300 resistance zone, driven by the downward pressure on the Greenback.
Looking ahead, US inflation data scheduled for release on Wednesday may further influence market dynamics. Investors are closely monitoring these developments, anticipating potential shifts in monetary policy that could affect currency valuations and trading strategies.