US President Donald Trump unveiled global reciprocal tariffs at a on Wednesday, sending international markets into a frenzy and weakening the rand overnight.
Reuters reported that the dollar slid broadly on Thursday and the euro firmed after Trump announced harsher-than-expected tariffs against US trading partners, jolting the markets as investors sought safe havens such as the yen and Swiss franc.
The highly anticipated tariff announcement sent shock waves through markets, with global stocks sinking and investors scrambling to the safety of bonds as well as gold, Reuters said.
By 7.54am, the rand had weakened to R18.93, having lost 0.25% overnight. As investors flocked to safe-haven bullion, gold prices hit a high of $3,167.94/oz in morning trade.
The rand weakened more than 2% over the course of Wednesday ahead of the Trump announcement on tariffs.
Trump held up a board showing the new charges on most countries, indicating that SA will face a 30% tariff on all goods sent to the US, with a 50% blanket tariff imposed on Lesotho.
In global markets, Nasdaq futures dropped 3.2% and European futures were down nearly 2%, while the Nikkei’s 3% fall in Tokyo — touching eight-month lows — led heavy losses across Asia.
“This is a game-changer, not only for the US economy but for the global economy,” Reuters reported citing Olu Sonola, head of US economic research at Fitch Ratings.
“Many countries will likely end up in a recession. You can throw most forecasts out the door if this tariff rate stays on for an extended period of time.”
US stocks were not immune to Trump’s announcement, with Apple’s market capitalisation falling by more than $240bn as its shares slid 7% in after-hours trade. Nvidia’s market cap dropped 5.6% or $153bn.
Benchmark 10-year US treasury yields fell more than 15 basis points to a five-month low of 4.04% and markets priced a higher chance of interest rate cuts even though the tariffs were likely to cause US inflation to spike sharply.
With Reuters
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