Trump's Tariff Plans: Global Markets on Edge

The dollar strengthened slightly as traders awaited U.S. President Donald Trump's new tariff announcement. The euro and sterling eased ahead of potential tariffs affecting global trade. A 20% tariff hike is anticipated, raising fears of stagflation in the U.S. economy and recession risks affecting market sentiment.

The dollar strengthened slightly on Wednesday as traders stood by for U.S. President Donald Trump's tariff announcement later in the day, which could have significant implications for global markets in the short term. The euro and sterling both dipped marginally ahead of the expected announcement from the White House's Rose Garden.

President Trump has been promoting April 2 as "Liberation Day," with White House spokeswoman Karoline Leavitt indicating reciprocal tariffs will begin immediately following his announcement. Markets may feel uneasy heading into the revelation, according to Carol Kong, currency strategist at Commonwealth Bank of Australia, with sentiment likely driven by further news of tariffs.

The Australian and New Zealand dollars also slightly gained, while there is speculation that Trump's aides might impose a universal 20% tariff hike on products, deviating from country-specific duties. Economists warn of elevated stagflation risks and recession fears that accompany the prospect of a trade war, amid U.S. manufacturing contraction and inflation concerns.

(With inputs from agencies.)