The US dollar strengthened on Monday after President Donald Trump announced plans for “much bigger” universal tariffs to boost domestic manufacturing. This statement caused ripples across global markets, particularly in Asia, where most shares fell.
Asian Markets Slip on Tariff Concerns
The MSCI Asia Pacific Index dropped 0.6%, with Japan’s top tech companies like Advantest Corp. and SoftBank Group seeing significant losses. Advantest Corp. fell 11%, while SoftBank Group dropped 6%.
Many Asian markets, including China, South Korea, and Taiwan, were closed for the Lunar New Year holidays, limiting broader market activity.
Dollar Strengthens as Risk Currencies Slide
The Bloomberg Dollar Spot Index rose 0.4%, reflecting the dollar’s position as a safe haven. Currencies like the Australian dollar, New Zealand dollar, and Thai baht all weakened.
Rodrigo Catril, a strategist at National Australia Bank, said, “The president’s protectionist agenda supports the dollar but isn’t good for global growth.”
Trump’s Tariff Plans Target Key Industries
Trump’s proposed tariffs focus on industries like semiconductors, pharmaceuticals, aluminum, and steel, aiming to compel companies to produce within the US. This move raises concerns of renewed trade tensions.
Impact on Commodities
Copper prices declined after Trump mentioned tariffs on metals, increasing fears of trade restrictions. Other commodities like oil and gold remained relatively stable.
Tech Sector Faces Pressure
The fallout from Trump’s announcement added pressure to an already shaky tech sector, still reeling from the impact of China’s DeepSeek AI model. On Monday, Nvidia lost 17%, erasing $589 billion in market value—the largest single-day loss for a company.
What’s Next for Global Markets?
Investors are now turning their attention to major events this week, including:
- Federal Reserve rate decision on Wednesday.
- Earnings reports from Microsoft, Tesla, Meta, and Apple.
- Economic data from the Eurozone and US, including GDP and inflation figures.
Summary of Key Market Moves
- Dollar: Gained 0.4%.
- Asian Markets: Fell 0.6% overall.
- S&P 500 Futures: Down 0.1%.
- Commodities: Copper declined, while crude oil rose 0.5%.
Despite the market turbulence, experts believe Trump’s tariffs could benefit domestic industries in the long run. However, the risk of trade wars and global economic slowdowns remains a key concern.