Dollar Gains, Asian Stocks Drop on Trump Tariffs
President Donald Trump’s pledge to impose tariffs on all steel and aluminum imports helped the dollar strengthen as investors braced for escalating global trade tensions. Hong Kong shares rose.
Equities were mixed, with Asian stock benchmarks dropping the most in a week while S&P 500 futures and contracts for the Euro Stoxx 50 edged up. The dollar gauge rose 0.2%, underscoring investor concerns about the inflationary impact of tariffs and how they could affect the Federal Reserve’s policy-easing cycle.
Trump’s intention to announce 25% levies on steel and aluminum on Monday added to already tense sentiment ahead of Fed Chairman Jerome Powell’s semi-annual congressional testimony and the U.S. president’s likely unveiling of reciprocal tariffs for “everyone” this week. Trump said the metals tariffs would apply to imports from all countries, though he did not specify when the tariffs would take effect.
“Markets continue to react to Trump’s policy changes, not economic data,” Bob Savage, head of market strategy and insight at BNY, wrote in a note to clients. “Fed Chair Powell’s views will be critical in assessing the cost of tariffs and other policy changes to the easing plan.” The dollar strengthened against most Group of 10 currencies including the Japanese yen and Canadian dollar following Trump’s comments.
“The risk remains that tariffs gradually increase over time,” said Billy Leung, investment strategist at Global X ETF. “That could fuel persistent inflationary pressures, make the Federal Reserve cautious about cutting rates, and reinforce the policy divergence factors that support a stronger dollar.” Chinese equities in Hong Kong bucked the trend and rose. The Hang Seng Technology Index hit its highest intraday since October, as the growing influence of artificial intelligence in the world’s second-largest economy fueled a wave of optimism. China Telecom Corp. rose as much as 10% in Shanghai to a record as analysts said the company would benefit from higher capital spending related to the integration of its new DeepSeek AI model.
Source: Bloomberg
