Dollar Falls as Trump Says Countries Face Reciprocal Tariffs

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Dollar Falls as Trump Says Countries Face Reciprocal Tariffs

foreign exchange :: 2025-02-14 :: source - bloomberg

By Anya Andrianova

(Bloomberg) -- The dollar fell to a session low as traders contemplated the impact of President Donald Trump’s plan to move forward with reciprocal tariffs on countries that trade with the US.

U.S Dollar note by Pixabay / Pexels

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The Bloomberg Dollar Spot Index traded 0.7% lower on Thursday as Trump signed an order that could lead to new levies as soon as April. The yen gained as much as 1.1% to 152.71 per US dollar, on safe-have appeal, while the Canadian dollar touched a new high for the year.

“The market remains wary of tariff headlines despite there still being little detail on what will be implemented,” said Skylar Montgomery Koning, a currency strategist at Barclays Plc.

The president signed a measure directing the US Trade Representative and Commerce secretary to propose new levies on a country-by-country basis. Trump also said he aims to offset non-tariff trading barriers like value-added taxes. Howard Lutnick, Trump’s nominee to lead the Commerce Department, told reporters all studies should be complete by April 1 and that Trump could act immediately afterward.

“On the surface, the several specific mentions of VAT definitely put a target on the Eurozone,” said Helen Given, a foreign-exchange trader at Monex. “But there is little information, though, on any specifics and no clarity.”

The euro rose 0.7% to $1.0457, the strongest level since Jan. 30. The currency is up for a third session, its longest winning streak this year. The British pound advanced 0.9% The Swiss franc was also among top performers in the Group of 10, rising 1.2% to trade at 0.9031 per US dollar.

Despite the greenback’s slide, the long-term view on the dollar remains positive, according to the Bloomberg dollar index’s fear-greed gauge. So far, the promises of new US tariffs have lifted the world’s reserve currency with investors seeking safety as levies risk upending global trade flows and fueling inflation in the US.

“The dollar has been swinging a bit, but traders’ newfound resolve to not trade on headlines alone seems like it will keep the dollar fairly steady without more concrete actions,” Monex’s Given said.

Tariff-related news have been a drag on emerging-market currencies, which rose broadly after the announcement. An MSCI gauge for the group traded 0.3% higher as of 2:20 p.m. in New York.

The Mexican peso, which has been whipsawed by tariff headlines since Trump took office, strengthened to a session high against the greenback, reversing losses from earlier in the day. Meanwhile, the Canadian dollar rose 0.7% to trade at 1.4205 per dollar. Trump had announced 25% tariffs on both US neighbors earlier this month but delayed the levies after negotiations.

“This announcement sounds again more like a negotiating tool more than an actual policy,” said Marco Oviedo, a strategist at XP Investimentos. “In the end, we will probably not see much in the way of tariffs.”

--With assistance from Betty Hou, Ruth Carson, Giovanna Bellotti Azevedo, Leda Alvim, Michael O'Boyle, Vassilis Karamanis and Masaki Kondo.

(Updates prices throughout, adds details on tariffs in second and fourth paragraphs.)