The Asian trading session witnessed a downturn in the AUD/USD as US President Donald Trump unveiled a sweeping expansion of tariffs on steel and aluminum imports. Announced via an executive order, the new tariffs target all countries, intensifying trade tensions and spurring global economic concerns. These measures, building upon the 25% tariff on steel and 10% on aluminum imposed in 2018, aim to simplify and strengthen US trade policy by raising duties, closing loopholes, and eliminating exemptions.
The US Dollar gained traction as investors reacted to the tariff announcement. The currency attracted buyers, driven by escalating US-China trade tensions and speculations of an imminent rate cut by the Reserve Bank of Australia (RBA). This shift in currency dynamics weighed heavily on the Australian dollar, contributing to its decline. Meanwhile, Mexico emerged as the top exporter to the United States with exports totaling $466.6 billion in 2024, according to data from the US Census Bureau.
Trump's decision to expand tariffs is part of a strategic focus on major trading partners like Mexico, China, and Canada. In 2024, these countries accounted for 42% of total US imports. The new tariffs effectively nullify existing trade agreements with economic powerhouses such as the European Union, the United Kingdom, and Japan.
The repercussions of Trump's executive order reverberated across financial markets, leading to heightened volatility. USD/JPY experienced selling pressure on Tuesday as concerns over a potential global trade war prompted investors to seek refuge in the safe-haven Japanese yen. The broadening of trade tensions fueled demand for the US Dollar, further buoyed by expectations of monetary easing from the RBA.
Amidst these developments, gold prices surged to a historic high, surpassing the $2,900 mark. The precious metal's rally highlights its traditional role as a safe haven asset during periods of economic uncertainty. Investors flocked to gold as a hedge against potential market instability stemming from Trump's aggressive trade policy.
In other news, Ripple announced a significant partnership with Unicâmbio, a leading Portuguese currency exchange provider. This collaboration aims to enhance cross-border payment solutions and expand Ripple's presence in the European market. The partnership underscores Ripple's commitment to fostering innovative financial technologies and facilitating seamless global transactions.
While Trump's tariff expansion has garnered attention and debate, the move signals a decisive stance on trade policy. By targeting key trading partners and eliminating previous exemptions, the administration aims to bolster domestic industries and address perceived trade imbalances. However, this approach may also exacerbate existing trade tensions and prompt retaliatory measures from affected countries.