- Dollar falls after Supreme Court blocks Trump tariffs.
- Euro, sterling and yen rise in Asia trade.
- Trump imposes temporary 15% import levy for 150 days.
- Markets assess legal uncertainty and Middle East tensions.
The U.S. dollar weakened on Monday after the Supreme Court struck down a broad swath of President Donald Trump's tariffs, prompting investors to reassess the outlook for global growth and U.S. fiscal policy.
According to Reuters, the euro rose 0.4% to $1.1820 in Asian trading, while sterling gained 0.3% to $1.3516. The dollar slipped 0.4% against the yen to 154.40. Trading volumes were thinner than usual due to a holiday in Japan and the Lunar New Year break in China.
The move followed Friday's ruling that Trump's sweeping tariff measures exceeded his authority. Although the president responded by announcing a temporary 15% blanket levy on imports for up to 150 days, markets appeared to focus on the legal constraint placed on his broader trade strategy.
"It weakens the dollar in the sense that it potentially benefits non-U.S. growth," said Sim Moh Siong, currency strategist at OCBC Bank in Singapore.
Mixed Signals For Currency Markets
Reuters data showed the safe-haven Swiss franc strengthened 0.5% to 0.7727 per dollar, reflecting cautious positioning. The New Zealand dollar edged higher to just below $0.60, while the Australian dollar dipped slightly to $0.7070 after the United States previously imposed only a 10% tariff on Australian goods.
Jason Wong, strategist at BNZ in Wellington, said the ruling could be viewed as limiting policy volatility. "This decision is another chip away at Trump's power ... so that's a positive for markets," he said. "But there's so many factors, there's all these moving parts, it's not tradable."
Beyond trade policy, investors are monitoring geopolitical tensions, including a U.S. military buildup in the Middle East as Washington pressures Iran over its nuclear ambitions. Markets are also looking ahead to Trump's State of the Union address on Tuesday, which could provide additional signals on fiscal and trade priorities.
The Supreme Court's decision did not address whether importers are entitled to refunds for duties already paid. Analysts expect prolonged litigation and uncertainty as the administration explores alternative legal avenues to reinstate tariff measures.
Fiscal Concerns And Longer-Term Outlook
Currency markets have been reassessing the dollar's trajectory for much of the past year. According to Reuters, the dollar index has fallen more than 9% through 2025, as investors shifted focus from tariff-driven trade dynamics to expectations of U.S. interest rate cuts and widening fiscal deficits.
Tai Hui, Asia-Pacific chief strategist at J.P. Morgan Asset Management, said the administration's revenue plans may face renewed scrutiny. "It does reflect on the fact that the administration's strategy to raise revenue is built on sources that could face significant uncertainty, while the propensity to spend continues to be high," he said. "So this could keep bond investors on the look out regarding fiscal discipline."
Bond markets have shown signs of sensitivity to fiscal concerns. Reuters reported that the U.S. 10-year Treasury yield edged up slightly in early Asian trade, while European yields were broadly steady.
In Europe, the European Commission urged the United States to honor an earlier trade agreement that eliminated tariffs on certain goods, including aircraft and spare parts. Asian trading partners are also weighing the implications of the court ruling and the temporary 15% levy, which is set to last 150 days.
Investors had previously anticipated that tariffs would strengthen the dollar by encouraging competitive currency weakening abroad. Instead, the greenback has struggled as markets increasingly focused on monetary policy and fiscal stability.
ANZ group chief economist Richard Yetsenga said on the bank's podcast that the ruling likely constrains the administration's ability to deploy tariffs as a revenue tool. "The key issue ... is that the Trump administration will be much more constrained in their ability to use tariffs in general," he said. "I don't think this will change too much about the global economy."
The dollar's pullback underscores shifting investor calculations as legal challenges reshape U.S. trade policy. While immediate currency moves were modest, traders remain alert to further policy announcements and geopolitical developments that could steer markets in the days ahead.
FAQs
Why did the dollar fall after the Supreme Court tariff ruling?
The U.S. Supreme Court struck down sweeping tariffs, which traders viewed as supportive for global growth outside the U.S. That reduced demand for the dollar, pushing it lower against currencies like the euro, yen and Swiss franc.
How did the euro and yen react to the weaker dollar?
The euro rose about 0.4% to around $1.1820, while the dollar fell roughly 0.4% against the yen to near 154.40. The Swiss franc also strengthened as investors sought safe-haven assets.
What tariffs did Trump announce after the court decision?
Following the ruling, Trump imposed a temporary 15% blanket levy on imports for up to 150 days. It remains unclear whether importers will receive refunds for duties already paid under the previous tariffs.
Could the ruling affect U.S. fiscal policy and bond markets?
Analysts said limiting tariff powers may create uncertainty over revenue plans, especially as government spending remains high. That could keep bond investors focused on fiscal discipline and the U.S. deficit outlook.
Will the court decision change the global economic outlook?
Some strategists said the ruling constrains the administration's ability to use tariffs, reducing policy volatility. However, many expect prolonged legal disputes and continued uncertainty over U.S. trade policy.
