Markets Slide as Trump Tariffs Ignite Global Trade Fears

By Tim Montague-Jones | Australian Stock Report | 08 July 2025

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Global markets fell sharply overnight as escalating trade tensions took centre stage, sparked by former President Donald Trump’s announcement of sweeping new tariffs on key trading partners. The S&P 500, Dow Jones, and Nasdaq all declined between 0.8% and 0.9%, amid rising fears of a global trade war.

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Tariffs Target Japan, South Korea and BRICS Nations

In a surprise move, Trump announced a 25% tariff on imports from Japan and South Korea, set to take effect in August. Additional duties are also proposed for countries including Malaysia, South Africa, Myanmar, Laos, and Kazakhstan. The former President further threatened aggressive retaliatory tariffs against the BRICS nations—Brazil, Russia, India, China, and South Africa—citing “anti-American practices,” with potential rates as high as 60–70%.

The announcement triggered a sharp market reaction, with investors rotating out of risk assets amid concerns of disrupted supply chains and slowing global trade. Tesla shares were among the hardest hit, dropping significantly after Elon Musk unveiled plans to launch a new political party—raising concerns about his continued focus on company operations. Tesla’s market capitalisation declined by US$68 billion in a single session.

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Commodities Mixed as Geopolitical Risks Rise

Major commodity markets showed a mixed reaction to the unfolding trade tensions. Brent crude oil rose 2.0% to US$69.65 a barrel, likely supported by expectations of supply disruptions. Gold held steady at US$3,331.90 an ounce as investors weighed its safe-haven appeal against a rising US dollar. Iron ore climbed 1.2% to US$96.24 a tonne.

Meanwhile, base metals were broadly weaker in local trading, with Aluminium, Copper, Nickel, and Zinc all declining, reflecting concerns over slowing industrial demand due to potential trade restrictions.

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US Dollar Surges on Relative Strength

The US dollar recorded its strongest daily gain in over three weeks, climbing 0.5% against a basket of currencies. This move reflects investor confidence that the US economy is more insulated from global trade shocks than its peers.

The Bloomberg Dollar Spot Index rose sharply, while major currencies such as the Japanese yen, South Korean won, and Brazilian real fell more than 1%. Analysts noted that the resilience of the US economy and a perceived retreat from more aggressive domestic policies helped support the greenback’s strength.

“There are deals getting done, and the US may not feel the pain as acutely as others,” said Skylar Montgomery Koning, currency strategist at Barclays.

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ASX 200 Dips, But Healthcare and Tech Offer Support

Locally, the ASX 200 slipped 0.16% on Tuesday, with Materials and Financials sectors weighing on the index. However, gains in the Information Technology, Utilities, and Healthcare sectors helped limit losses.

Notable news included Cochlear receiving FDA approval for three of its next-generation hearing implants. The Nucleus Nexa System, Kanso 3, and Kanso 3 Nexa Sound Processors are expected to launch in the US by the end of Q1 FY26, supporting Cochlear’s continued innovation-led growth strategy.

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Platinum Asset Management Sees Outflows

In fund manager news, Platinum Asset Management reported net outflows of $428 million for June. The group also flagged distribution payments of approximately $151 million in July and noted turnaround program costs of around $40 million for the year. This highlights continued challenges for active managers in a highly competitive and performance-driven market.

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Outlook

With markets on edge, investors will be closely watching the release of the US Federal Reserve’s latest meeting minutes this week. While interest rates remain at 4.25–4.5%, the combination of geopolitical risk and macroeconomic uncertainty will likely drive near-term volatility. Expect a cautious tone in the days ahead as investors digest trade headlines and reassess global positioning.

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