Dollar Rises as Trump Vows ‘Much Bigger’ Tariffs
U.S. futures rose after Monday’s rout over valuations in the artificial intelligence sector, while the dollar strengthened after U.S. President Donald Trump’s latest tariff threats.
The Bloomberg Dollar Spot Index rose 0.5%, with the U.S. currency gaining against all Group-of-10 currencies, as Trump said he wanted much bigger tariffs across the board than the 2.5% that new Treasury Secretary Scott Bessent has said he prefers. Copper fell on Trump’s comments that he planned to impose tariffs on metals, as well as aluminum and steel.
Nasdaq futures rose 0.2% a day after Chinese artificial intelligence startup DeepSeek rattled markets with its low-cost AI model that challenged the lofty valuations of big tech stocks. Europe’s benchmark stock index rose 0.2%.
Speaking to reporters late Monday, Trump said he would soon impose tariffs on semiconductors, pharmaceuticals and some metals produced abroad to force manufacturers to produce in the country. The new administration has been debating trade levies through January, with Bloomberg News reporting that Trump advisers are considering a gradual increase of about 2% to 5% per month.
“Bessent talked about a universal tariff across the board, and even if it’s gradual, it could go up to 20% — that’s a big deal,” said Rodrigo Catril, a strategist at National Australia Bank Ltd. in Sydney. “The president has a protectionist agenda, which is not good for global growth and supports the dollar as a safe haven.” U.S. Treasury bonds moved lower, with the 10-year yield up two basis points to 4.55% after dropping nine basis points on Monday as investors turned to safer assets.
Monday’s decline in U.S. equities was fueled by the rise of DeepSeek’s latest AI model to the top of Apple Inc.’s App Store. Nvidia Corp., a prime example of the AI boom, plunged 17% in New York, wiping out $589 billion in market value, the highest ever for a single stock. “Is it time to fade yesterday’s move? Our view is selectively yes,” said Mohit Kumar, a strategist at Jefferies International Ltd. “We see DeepSeek and other AI developments as positive for the macro picture as more companies and regions will have access to cheaper AI, which can help improve efficiency.” Global traders will be looking to earnings announcements from companies such as Microsoft Corp. and Apple this week to restore confidence in the so-called Magnificent Seven.
Shares of the tech companies are near record highs and their valuations are rising. At the same time, the group’s profit growth is projected to hit its slowest pace in nearly two years this earnings season.
Source: Bloomberg
