US Dollar Weakens After Supreme Court Blocks Trump Tariffs

The US dollar declined Monday following the Supreme Court's decision to overturn most of President Trump's tariffs, with traders viewing the ruling as positive for global economic growth. Currency markets saw modest gains for the euro and other major currencies, though Middle East tensions limited broader movements.

Currency markets responded Monday to the US Supreme Court’s ruling against President Donald Trump’s extensive tariff program, with the American dollar weakening as investors interpreted the decision as beneficial for worldwide economic expansion.

The euro climbed 0.4% to reach $1.1823, while the British pound gained similar ground to hit $1.3521 during early Asian trading sessions. Trading activity remained subdued due to holidays in Japan and China’s Lunar New Year celebration. Against the Japanese yen, the dollar dropped 0.4% to 154.42.

Friday’s Supreme Court ruling determined that Trump’s comprehensive tariff strategy went beyond presidential powers. In response, Trump criticized the court’s decision and implemented a broad 15% import tax, while maintaining that existing high-tariff agreements with trading partners should remain in effect.

“It weakens the dollar in the sense that it potentially benefits non-U.S. growth,” explained Sim Moh Siong, a currency analyst at OCBC Bank in Singapore.

Siong noted that the long-term currency effects remain uncertain, as reduced US government income could harm both the fiscal situation and dollar strength, though limiting Trump’s authority might reduce policy uncertainty.

Both the New Zealand and Australian currencies showed morning gains, with Australia’s dollar surpassing 71 cents while New Zealand’s currency approached 60 cents. The Swiss franc, considered a safe investment during uncertain times, jumped 0.5% to 0.7716 francs per dollar.

“This decision is another chip away at Trump’s power … so that’s a positive for markets,” stated Jason Wong, a strategist with BNZ in Wellington.

“But there’s so many factors, there’s all these moving parts, it’s not tradable,” Wong added.

Beyond tariff concerns, financial markets are monitoring US military expansion in the Middle East as America pressures Iran to abandon nuclear weapon development, while also anticipating Trump’s Tuesday State of the Union speech.

Trump’s substitute tariffs will last 150 days, though uncertainty remains about whether the US must reimburse importers for previously collected duties, as the Supreme Court didn’t address this matter.

Financial experts predict extended legal battles and renewed confusion that could hamper economic activity while Trump explores alternative methods to reinstate global tariffs permanently.

“Things don’t change too much,” said Martin Whetton, Westpac’s head of financial markets strategy in Sydney.

On Sunday, the European Commission insisted the US honor last year’s agreement with the EU, which eliminates tariffs on certain items including aircraft and replacement parts.

Asian trading partners cautiously evaluated new uncertainties, joining investors who have been surprised by market reactions to Trump’s trade policies, which have not succeeded in reducing America’s trade deficit.

Before Trump’s election victory, investors had expected tariffs to strengthen the dollar, assuming other nations would devalue their currencies to counteract export damage.

However, throughout 2025 the dollar weakened, with the dollar index falling over 9%, as markets focused on expected interest rate reductions, concerns about the US budget deficit, and Trump’s unpredictable policy changes.

“The key issue … is that the Trump administration will be much more constrained in their ability to use tariffs in general,” ANZ’s chief economist Richard Yetsenga said during the bank’s podcast.

“I don’t think this will change too much about the global economy,” Yetsenga concluded.