Markets React as China Imposes 84% Tariff on U.S. Goods

China imposes an 84% tariff on U.S. imports shakes markets; gold surges, dollar weakens, and volatility rises amid trade tensions.

Markets were shaken overnight as China imposed an 84% tariff on U.S. imports, a sharp escalation from the previous 34% duty. This move was in direct retaliation to the U.S. government’s decision to delay tariffs on several nations—excluding China—for 90 days. The escalation has intensified trade tensions, leading to heightened market volatility.

Markets React as China Imposes 84% Tariff on U.S. Goods

The Dollar Index (DXY) weakened, falling towards 102.50, reflecting increased pressure on the greenback. Meanwhile, gold surged past $3,100 per ounce as investors flocked to safe-haven assets, nearing its all-time high of $3,167.72 set on April 2.

Stock markets saw mixed reactions. U.S. equities initially dropped but partially recovered as investors awaited key economic data releases later today, including the Consumer Price Index (CPI) and unemployment claims.

What This Means for Europe & U.S. Sessions

The market is bracing for continued volatility as traders digest the implications of the new tariffs. Analysts expect the European and U.S. trading sessions to experience pressure on risk assets, with safe-haven demand driving up gold and U.S. Treasuries.

The Dollar Index (DXY) Outlook

Key data releases today at 12:30 PM GMT include:

• CPI Data – Expected to show a continued slowdown in inflation.
• Unemployment Claims – Forecasted to remain stable at 223K.

If CPI confirms a cooling inflation trend, the dollar may face further downward pressure, reinforcing a bearish sentiment for the next 24 hours.

Gold (XAU) Soars Amid Uncertainty

With inflationary concerns moderating, demand for gold remains strong. Spot prices surged over 3.5% on Wednesday, reaching $3,099.50/oz. Analysts expect gold to remain elevated as investors seek stability amid geopolitical and economic uncertainty.

The Australian Dollar (AUD) Rebounds Strongly

Reserve Bank of Australia (RBA) Governor Michele Bullock will speak at the Chief Executive Women 40th Anniversary Melbourne Annual Dinner, potentially addressing trade uncertainties. The Australian dollar surged over 3%, pushing towards 0.6200 in early trading.

Central Bank Updates

• Federal Reserve – Maintained interest rates at 4.25-4.50% but revised GDP growth forecasts downward to 1.7% for 2025.
• European Central Bank (ECB) – Cut rates by 25 basis points in March, projecting inflation to stabilize at 2% by 2027.
• Bank of England (BoE) – Held rates at 4.50%, with inflation still projected to peak at 3.75% in Q3 2025.
• Bank of Canada (BoC) – Reduced rates to 2.75% while monitoring trade tensions.
• Bank of Japan (BoJ) – Kept policy rate at 0.5%, with inflation steadily rising.
• Swiss National Bank (SNB) – Lowered rates to 0.25% in response to softer inflationary pressures.

Currency Market Summary

• NZD: Despite a rate cut to 3.50%, the New Zealand dollar surged 2.3%, trading around 0.5640.
• JPY: The yen weakened as USD/JPY spiked above 148 but later retraced to below 147 amid safe-haven demand.
• EUR: The Euro saw volatility, rallying to 1.1095 before stabilizing around 1.0950.
• GBP: The pound gained traction, rising to 1.2864 amid dollar weakness.
• CAD: Strengthened due to easing U.S. tariffs and a rebound in crude oil prices.

Oil Market Reaction

WTI crude rebounded sharply by over 14%, climbing to $62.93 per barrel following the U.S. decision to delay tariffs for most nations except China. However, rising crude inventories suggest that demand remains weak, signaling potential headwinds for oil prices in the near term.

With central banks navigating a fragile global economy, trade tensions remain a key risk factor. Investors will closely monitor economic data and policy decisions to gauge market direction. The next 24 hours will likely see continued fluctuations across forex, commodities, and equities as uncertainty looms large over global markets.

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