The US dollar remained under pressure on Tuesday as Asian markets assessed the potential impact of renewed turbulence surrounding U.S. President Donald Trump’s tariff policies on global trade.
The greenback held onto earlier losses as China and Japan returned from public holidays. Market sentiment was unsettled after President Trump warned countries against stepping back from recently negotiated trade agreements, following a U.S. Supreme Court ruling that struck down his emergency tariffs.
Trade Uncertainty Weighs on Dollar
Fresh tariff threats from Washington have clouded the outlook for international trade. The Supreme Court ruled that President Trump exceeded his authority by invoking a 1977 emergency law to impose sweeping tariffs.
Currency strategists say the renewed policy uncertainty has pushed markets back into a defensive stance. Ray Attrill, head of currency strategy at National Australia Bank, noted that the main concern is the lack of clarity over the future global trade framework, particularly at a time when many countries had been close to finalising trade deals.
The US Dollar Index, which tracks the dollar against a basket of major currencies, was flat at 97.69 after falling as much as 0.45% in the previous session.
The euro edged up 0.07% to $1.1793, while the Japanese yen slipped 0.03% to 154.71 per dollar.
Tariff Escalation and Policy Signals
Over the weekend, President Trump said he would raise a temporary tariff on imports from 10% to 15%, the maximum permitted under the law. He later warned on social media that countries attempting to “play games” in response to the court ruling could face even steeper duties.
The Wall Street Journal also reported that the administration is considering additional national security tariffs on sectors including large-scale batteries, iron products, plastic piping, industrial chemicals, and power grid and telecom equipment.
In Europe, the European Parliament postponed a vote on the European Union’s trade agreement with the United States due to the new import taxes.
Japan’s trade minister Ryosei Akazawa spoke with U.S. Commerce Secretary Howard Lutnick, requesting that Japan’s treatment under the new tariff framework remain consistent with last year’s agreement.
Yen Reaction and Rate Checks
After Japan reopened following a long weekend, the yen weakened slightly. The Nikkei newspaper reported that U.S. authorities conducted so-called rate checks in January without a request from Tokyo and were prepared to coordinate intervention efforts to support the Japanese currency.
Broader Market Concerns
The renewed trade tensions come at a time when investors are already questioning the sustainability of heavy spending on artificial intelligence and monitoring inflation risks in the United States.
Federal Reserve policymakers have signalled that interest rates are likely to remain on hold at least until June. Fed Governor Christopher Waller said he would consider keeping rates unchanged at the March meeting if upcoming labour market data shows a stronger footing after earlier weakness.
Geopolitical risks are also in focus. The U.S. State Department is evacuating non-essential personnel from its embassy in Beirut amid rising concerns over potential military conflict involving Iran.
Other Markets
The Australian dollar gained 0.1% to $0.7061, while the New Zealand dollar rose 0.08% to $0.5961.
In cryptocurrency markets, bitcoin advanced 0.6% to $64,961.86, and ether climbed 0.2% to $1,866.88.
