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Gold jumped and the dollar fell on Monday after Donald Trump deepened uncertainty over global trade by imposing a new 15 per cent tariff in response to a US Supreme Court ruling that his previous policy was unlawful.
Trump responded to Friday’s landmark ruling from America’s top court by announcing a flat-rate tariff on US trading partners, which is set to come into force on Tuesday.
The new duty relies on the 1974 Trade Act and will allow Trump to set import restrictions for up to 150 days. The Supreme Court ruled that the president had exceeded his authority in using emergency powers to impose his “liberation day” tariffs last year.
The dollar weakened 0.3 per cent against a basket of currencies from key trading partners, while gold rose 0.7 per cent to $5,142 a troy ounce.
Futures tracking the S&P 500 and Stoxx Europe 600 stock indices slipped 0.5 per cent and 0.2 per cent, respectively.
Bitcoin dropped 2.7 per cent to $65,801 a token. Yields on 10-year Treasuries, which move inversely to prices, fell 0.01 percentage points to 4.07 per cent.
“The market is pricing in uncertainty because they don’t know where tariffs are going to land,” said Ecaterina Bigos, chief investment officer for Asia ex-Japan at BNP Paribas Asset Management.
Trump’s announcement of the “liberation day” tariffs in April convulsed global markets but stocks, led by the AI boom, have since recovered to hit new record highs.
But equities in Asia bounced on Monday as investors welcomed the possibility of lower tariffs for some exporters under Trump’s proposed new regime.
Hong Kong’s Hang Seng index led gains, adding 2.4 per cent. Taiwan’s Taiex closed up 0.5 per cent and South Korea’s Kospi climbed 0.7 per cent. Japan’s markets were closed.
Markets in mainland China, which would stand to be one of the countries with most to gain from a 15 per cent tariff, were also closed.
China’s commerce ministry, in its first official response to the Supreme Court ruling, said on Monday that it opposed unilateral tariffs and was “conducting a comprehensive assessment” of the ruling’s impact.
“We have also noted that the US is preparing alternative measures such as trade investigations to maintain its tariffs on trading partners,” the ministry said. “China will closely monitor this and firmly safeguard its interests.”
Morgan Stanley economists said in a report that the new headline tariff rate of 15 per cent would reduce the average weighted levy on Asian goods to 17 per cent from 20 per cent, while those on China would decline to 24 per cent from 32 per cent.
While this relief could be “temporary”, with the US expected to impose new levies on some sectors and economies, “it does appear to us that tariffs on Asia have likely peaked”, they said.
