Dollar and stocks decline after US Supreme Court hits Trump’s tariffs

The dollar and US and European stock futures declined while gold rose on Monday after President Donald Trump set new tariffs over the weekend in response to a Supreme Court ruling.

The dollar weakened 0.4 per cent against a basket of currencies from its key trading partners, while gold rose 1 per cent to $5,160 a troy ounce. Yields on 10-year US Treasuries, which move inversely to prices, rose 0.015 percentage points to 4.08 per cent.

Futures tracking the S&P 500 and Stoxx Europe 600 stock indices slipped 0.7 per cent and 0.4 per cent, respectively. Bitcoin dropped 3.7 per cent to $65,116 a token, and London’s FTSE 100 was set to open down 0.2 per cent.

“The market is pricing in uncertainty because they don’t know where tariffs are going to land,” said Ecaterina Bigos, chief investment officer for Asia ex-Japan at BNP Paribas Asset Management. “There are other ways in which the administration could impose those tariffs.”

Meanwhile, stocks in Asia, where many countries stand to benefit from a tariff reprieve, broadly rose on Monday. Hong Kong’s Hang Seng index led gains, adding 2.6 per cent. Taiwan’s Taiex and South Korea’s Kospi each climbed 0.5 per cent. Markets in mainland China and Japan were closed for holidays.

The Supreme Court on Friday struck down a key part of Trump’s economic strategy, ruling in a 6-3 vote that he exceeded his authority in using the International Emergency Economic Powers Act to impose tariffs on dozens of countries.

Following the decision, Trump set a new global tariff rate of 10 per cent, which he raised to 15 per cent on Saturday, citing a section of the 1974 Trade Act that allows presidents to set import restrictions for up to 150 days.

“Without any replacement tariffs this is a big positive for China,” said Mitul Kotecha, head of foreign exchange and emerging markets macro strategy at Barclays.

China’s commerce ministry in its first official response to the Supreme Court ruling said on Monday that it opposed unilateral tariffs and was “conducting a comprehensive assessment” of the ruling’s impact.

“We have also noted that the US is preparing alternative measures such as trade investigations to maintain its tariffs on trading partners,” the ministry said. “China will closely monitor this and firmly safeguard its interests.”

Morgan Stanley economists said in a report that the new headline tariff rate of 15 per cent would reduce the average weighted levy on Asian goods to 17 per cent from 20 per cent, while those on China would decline to 24 per cent from 32 per cent.

While this relief could be “temporary”, with the US expected to impose new levies on some sectors and economies, “it does appear to us that tariffs on Asia have likely peaked”, they said.