Trump's Tariff Turbulence: Global Markets Brace for Impact

The dollar strengthened as President Trump's new tariff threats created uncertainty in global markets, impacting commodities and currencies. Investors remain cautious amid fears of a trade war, intensified by China's retaliatory duties. Market focus is on U.S. inflation data and Federal Reserve signals on interest rates.

The dollar gained strength on Monday following fresh tariff threats from President Trump, which heightened market risk sentiment and pressured the euro and other major currencies. Trump announced he would unveil new 25% tariffs on steel and aluminium imports to the U.S., alongside reciprocal measures matching international tariff rates.

This escalation sparked concerns over a potential global trade war, with China's retaliatory tariffs on U.S. goods slated to take effect. Last week's trade tensions, highlighted by developments between the U.S., Mexico, and Canada, provoked measured reactions from Beijing, indicating a possibility for negotiation.

Market volatility is expected to persist, with investor focus shifting toward upcoming U.S. inflation data and remarks from Federal Reserve Chair Jerome Powell. Analysts warn that tariffs could contribute to inflationary pressures, influencing the Fed's interest rate decisions, which currently anticipate modest cuts within the year.

(With inputs from agencies.)