Asia Under Pressure: How Trump’s New Tariffs and $100 Oil Sent Regional Currencies Tumbling
The Return of the Trade Wars: Tariffs Take Effect and Markets Shudder
Friday began with a severe hangover for Asian currencies. The new tariff regime, announced by President Donald Trump with his characteristic fanfare, came into force, and the consequences were immediate. The temporary 10% tariffs that had served as a warning are now history, replaced by new rates of 10% and 12.5% on imports from 60 trading partners. Almost all US imports are now subject to these levies, apart from a narrow list of exempt products, including oil, gas, and certain food items.
For Asia, the world’s primary manufacturing hub and a major supplier of goods to the United States, this represents a serious blow. The US Dollar Index remains close to a three-week high, and this is no coincidence. Investors are moving into the US currency, viewing it as a safe haven amid growing uncertainty.
However, tariffs are not the only issue. Inflation expectations, fuelled by these measures and the recent surge in oil prices, are forcing markets to reconsider their forecasts for US interest rates. This reassessment is working against Asian currencies.
Benchmark Treasury yields have reached fresh multi-month highs, with the yield on 10-year bonds rising above 4.7%. Thirty-year yields remain firmly above 5%. This means that borrowing costs in the United States are increasing, making the dollar even more attractive to investors seeking higher returns.
Asian currencies, which were already under pressure, are now facing a double blow: a stronger dollar and growing uncertainty surrounding global trade.
The Energy Shock: When Oil Becomes a Weapon
Tariffs are only half of the story. The other half is oil, which has once again broken through the psychologically important level of $100 per barrel.
This is not simply another price spike. It is the result of actual military...
