US court strikes down Donald Trump's 'Liberation Day' tariffs

Lallalit Srijandorn FXStreet

On Wednesday, a US federal court blocked US President Donald Trump's "Liberation Day" tariffs from going into effect. A federal trade court ruled Trump didn't have the authority to impose across-the-board duties on imports from nations that sell more to the United States than they buy, per Reuters.

Market reaction

The US Dollar Index (DXY) is trading 0.19% higher on the day at 100.08, as of writing.

Tariffs FAQs

What are tariffs?

Tariffs are customs duties levied on certain merchandise imports or a category of products. Tariffs are designed to help local producers and manufacturers be more competitive in the market by providing a price advantage over similar goods that can be imported. Tariffs are widely used as tools of protectionism, along with trade barriers and import quotas.

What is the difference between taxes and tariffs?

Although tariffs and taxes both generate government revenue to fund public goods and services, they have several distinctions. Tariffs are prepaid at the port of entry, while taxes are paid at the time of purchase. Taxes are imposed on individual taxpayers and businesses, while tariffs are paid by importers.

Are tariffs good or bad?

There are two schools of thought among economists regarding the usage of tariffs. While some argue that tariffs are necessary to protect domestic industries and address trade imbalances, others see them as a harmful tool that could potentially drive prices higher over the long term and lead to a damaging trade war by encouraging tit-for-tat tariffs.

What is US President Donald Trump’s tariff plan?

During the run-up to the presidential election in November 2024, Donald Trump made it clear that he intends to use tariffs to support the US economy and American producers. In 2024, Mexico, China and Canada accounted for 42% of total US imports. In this period, Mexico stood out as the top exporter with $466.6 billion, according to the US Census Bureau. Hence, Trump wants to focus on these three nations when imposing tariffs. He also plans to use the revenue generated through tariffs to lower personal income taxes.

Author

Lallalit Srijandorn

FXStreet

Lallalit Srijandorn is a Parisian at heart. She has lived in France since 2019 and now becomes a digital entrepreneur based in Paris and Bangkok.

GBP/USD remains depressed below 1.3400 as escalating US-Iran tensions underpin USD

The GBP/USD pair finds some support near 1.3370 after a modest gap-down opening on Monday, though it lacks bullish conviction and remains below 1.3400. Nevertheless, spot prices, for now, seem to have stalled the pullback from a nearly four-week high, around the 1.3450 area, touched on Friday amid mixed fundamental cues.

EUR/USD weakens to near 1.1400 as US-Iran escalation boosts US Dollar

The EUR/USD pair edges lower to around 1.1400 during the early Asian session on Monday, pressured by heightened geopolitical tensions in the Middle East. Federal Reserve Bank Governor Christopher Waller and European Central Bank policymaker Isabel Schnabel are set to speak later in the day.

Gold struggles below $4,100 on Fed-hike bets, firmer USD

Gold weakens back below $4,100 during the Asian session on Monday as a further escalation of tensions between the US and Iran underpins the safe-haven US Dollar. Moreover, inflation worries stemming from rising Crude Oil prices cement expectations for a Fed rate hike in 2026 and further benefit the buck, exerting additional pressure on the non-yielding bullion. The commodity, however, holds above last week's swing low as traders seem hesitant ahead of this week's US inflation figures.

Week ahead: US CPI and Warsh testimony to take centre stage, BoC eyed too

US inflation report and Warsh testimony to headline the week. Dollar to dominate amid slew of other US data and Mideast tensions. Amid fresh Iran escalation, China GDP to shed light on Q2 impact. Bank of Canada not expected to follow RBNZ with rate hike.

Five sessions, one round trip: Why the whipsaw is exactly what Warsh ordered

Markets opened July with a December hike as the base case and spent five trading sessions unlearning and relearning it. A 57K payrolls print bled the tightening bets out of the strip; a re-shut Strait of Hormuz is pushing them back in. Wednesday's minutes from the June Federal Open Market Committee meeting landed mid-round-trip, describing a world that had already stopped existing.

Five sessions, one round trip: Why the whipsaw is exactly what Warsh ordered

Markets opened July with a December hike as the base case and spent five trading sessions unlearning and relearning it. A 57K payrolls print bled the tightening bets out of the strip; a re-shut Strait of Hormuz is pushing them back in. Wednesday's minutes from the June FOMC meeting landed mid-round-trip, describing a world that had already stopped existing.