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02/06/25
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Trump’s Tariff Tactics and NZ’s Rate Cut: Impacts on Global Trade and Currency
President Trump has announced plans to significantly increase import tariffs on steel and aluminum, raising them from 25% to 50% in an effort to bolster the US steel industry. This move is seen as part of a broader strategy to exert pressure on international steel producers and escalate the ongoing trade tensions. The announcement was made during a rally in Pennsylvania, where Trump emphasized the need to secure the domestic steel market.
In parallel, the US Court of Appeals for the Federal Circuit recently ruled in favor of the President’s tariffs, allowing them to take effect. This decision overturned an earlier ruling from a three-judge panel at the Court of International Trade, which had paused the implementation of what have been termed “Liberation Day” tariffs. The federal court determined that the President had exceeded his authority in imposing wide-ranging import tariffs, labeling his executive orders from early April as unlawful.
Meanwhile, the economic landscape in New Zealand is also adjusting following a rate cut by the Reserve Bank of New Zealand (RBNZ). The RBNZ has stated that interest rates are now positioned within the neutral range of 2.5% to 3.5% after last week’s 25 basis points reduction in the Official Cash Rate (OCR). Analysts note that the effects of previous rate cuts have yet to fully materialize in the nation’s economy, highlighting the need for ongoing observation of economic data to inform future monetary policy decisions.
The New Zealand dollar has responded positively to the softer US dollar, appreciating by over 0.50% as it trades around 0.6000 against the USD during the Asian trading hours. This rise reflects growing concerns over sluggish growth and renewed inflation within the United States, contributing to the weaker dollar’s impact on currency markets.
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