U.S. Dollar Weakens as Trump’s New Tariff Threats Shake Global Markets

The U.S. dollar struggled Tuesday as Asian markets reopened amid uncertainty over President Trump's latest tariff announcements. After the Supreme Court struck down his emergency tariffs, Trump warned of even higher duties on countries that "play games" with trade agreements.

The U.S. dollar faced pressure Tuesday as Asian financial markets returned from holiday breaks, grappling with fresh uncertainty surrounding President Donald Trump’s trade policies and tariff announcements.

America’s currency maintained its recent decline while markets in China and Japan resumed trading, following Trump’s warnings to nations considering backing away from existing trade agreements after the Supreme Court overturned his emergency tariff measures.

Japan’s yen experienced slight weakness following reports in the Nikkei newspaper indicating that American officials spearheaded currency intervention efforts last month aimed at supporting Japan’s monetary unit.

The Supreme Court’s decision that Trump overstepped his constitutional powers by using a 1977 emergency statute to implement tariffs has created fresh doubts about international trade’s future direction.

Ray Attrill, who leads currency strategy at National Australia Bank, expressed concerns during a NAB podcast, stating: “Now we’re back in a very uncertain environment. It’s just the uncertainty about what the future trade landscape will look like, just at a point where most countries had signed or were on the cusp of signing trade deals.”

The dollar index, tracking America’s currency performance against multiple international currencies, remained unchanged at 97.69 following a decline of up to 0.45% during Monday’s trading session.

European currency gained 0.07% reaching $1.1793, while Japan’s yen declined 0.03% against the dollar, trading at 154.71 per dollar.

Over the weekend, Trump announced plans to increase temporary import duties from 10% to 15% on goods from all nations—the highest rate permitted under existing legislation. Monday brought additional social media threats from the president, promising even steeper penalties for countries that “play games” following the high court’s ruling.

According to Wall Street Journal reporting, the Trump administration is exploring additional national security-based tariffs targeting sectors including large-scale battery production, cast iron manufacturing, iron fittings, plastic piping, industrial chemicals, and power grid plus telecommunications equipment.

European Parliament lawmakers postponed Monday’s scheduled vote on the EU-U.S. trade agreement, citing concerns over the new import taxes.

Japanese officials confirmed that Trade Minister Ryosei Akazawa contacted U.S. Commerce Secretary Howard Lutnick Monday, urging that Japan receive treatment under new tariff policies no less favorable than previous agreements.

As Japan’s markets reopened following an extended weekend, the yen weakened slightly after Nikkei reported that American authorities conducted currency market rate checks in January without Tokyo’s request, while remaining prepared for joint intervention to strengthen the yen.

These trade policy uncertainties emerge alongside growing skepticism about massive artificial intelligence investments and Federal Reserve officials’ worries regarding persistent inflation levels.

America’s central bank is anticipated to maintain current interest rates through at least June. Fed Governor Christopher Waller indicated Monday his willingness to keep rates steady at March’s meeting if February employment data shows the U.S. job market has “pivoted to a more solid footing” after 2025’s weak start.

Market participants are also monitoring escalating geopolitical tensions.

The State Department announced Monday the withdrawal of non-essential government staff and eligible family members from the U.S. embassy in Beirut, according to a senior department official, amid rising concerns about potential military confrontation with Iran.

Australia’s dollar gained 0.1% against the greenback, reaching $0.7061. New Zealand’s currency rose 0.08% to $0.5961.

Cryptocurrency markets saw bitcoin increase 0.6% to $64,961.86, while ethereum climbed 0.2% to $1,866.88.