USD fell against most of its major rivals in the European session on Wednesday, as odds of a recession in the U.S. increased after President Donald Trump's steep new tariffs took effect at midnight.
The U.S. Dollar Index (DXY), which measures the U.S. currency's value relative to a basket of foreign currencies, declined 0.65% from its previous close to 102.29.
Trump’s country-specific reciprocal tariffs went into effect on April 9 at 12:01 a.m. EDT with China at 104%, Vietnam at 46%, India at 26%, South Korea at 25%, Japan at 24%, and the European Union (EU) at 20%. The White House (WH) stated that “these tariffs will remain in effect until such a time as President Trump determines that the threat posed by the trade deficit and underlying nonreciprocal treatment is satisfied, resolved, or mitigated.” It was also noted that Trump may “increase the tariff if trading partners retaliate or decrease the tariffs if trading partners take significant steps to remedy non-reciprocal trade arrangements and align with the United States on economic and national security matters.”
The U.S. new tariffs, which marked a serious escalation in global trade tension, fueled recession fears and spurred safe-haven demand.