Financial markets turned cautious Thursday as former U.S. President Donald Trump reignited fears of an escalating trade war by threatening to implement a sweeping new set of tariffs on imported goods. The proposal includes levies ranging from 10% to 70% on goods from countries deemed to be “currency manipulators” or who “undermine U.S. strategic interests” — with the first wave expected as early as Friday, ahead of the critical July 9 tariff deadline.

This renewed protectionist stance has triggered risk aversion across global markets, pushing U.S. equity futures and the U.S. dollar lower, while traditional safe-haven assets such as gold gained.

Market Reactions: Risk-Off Mode Engaged

The immediate market impact was notable:

• S&P 500 futures fell by 0.4%

• U.S. dollar weakened against major peers, including the euro, yen, and pound

• Copper prices declined 1.8% on global growth concerns

• Bitcoin slipped by 0.7%, reacting in tandem with equities

• Gold rose by 0.2%, reaching $3,350/oz as investors sought safety

This suggests investors are bracing for increased global trade friction, reminiscent of the 2018–2020 U.S.–China trade war that roiled markets and supply chains.

What’s Behind the New Tariff Push?

Trump’s move appears aimed at reshaping U.S. trade relationships and protecting American manufacturers. Sources close to his campaign suggest the following motivations:

• Curb imports from strategic rivals, including China and Vietnam

• Promote domestic reindustrialization through protectionism

• Pressure trading partners ahead of trade talks

If implemented, the new tariff scheme could cover over $600 billion worth of goods, and has already drawn criticism from economists and global trade partners.

Global Trade Implications

• China’s yuan fell slightly on expectations of retaliatory tariffs

• Eurozone exporters voiced concern over supply chain disruption

• Vietnam, a major beneficiary of previous U.S.–China trade tensions, could face headwinds if targeted

Investors are now watching for countermeasures or diplomatic escalations from Beijing, Brussels, or Hanoi.

Forex Impact: Dollar Drops, Volatility Rises

Currency markets have reacted swiftly:

• USD/JPY dropped to 143.60

• EUR/USD rose to 1.0995

• GBP/USD climbed to 1.2753

Safe-haven currencies like the Swiss franc and Japanese yen gained on flight-to-safety demand.

Forex traders should prepare for volatility spikes leading into the July 9 deadline, with sentiment-driven swings likely across USD pairs.

Outlook: Brace for Uncertainty

If Trump follows through on the tariff package, markets could see a return of headline-driven risk cycles that characterized earlier trade war periods. Equities, commodities, and currency pairs tied to global trade will likely remain volatile.

ForexFlash will continue tracking developments as the July 9 deadline nears and global markets respond.