The U.S. dollar declines broadly as President Donald Trump proposes new tariffs on European Union goods and threatens duties on foreign-made smartphones.
Trump recommends a 50% tariff on EU imports starting June 1, citing stalled negotiations and calling the bloc difficult to deal with. He also warns of a 25% tariff on iPhones not manufactured in the United States, along with smartphones from Samsung and other companies.
The policy shift raises concerns about its potential impact on global trade and economic growth. The dollar falls 1% against the Japanese yen to 142.48, marking a two-week low. Over the week, the dollar is down 2.2% versus the yen, its steepest weekly decline since early April.
The euro rises 0.8% to $1.1363, touching a two-week high and posting its strongest weekly performance in six weeks. The dollar index drops 0.8% to 99.09, a three-week low, and records a weekly loss of 1.9%.
U.S. equities fall alongside the dollar. Treasury Secretary Scott Bessent attributes the tariff proposal to slow progress in EU trade talks, saying the administration finds the current offers unsatisfactory. In Japan, the yen gains additional support from data showing April’s core inflation at its fastest annual pace in over two years, raising expectations for another rate hike by the Bank of Japan later this year.
Meanwhile, Japan’s long-dated government bonds hit record highs this week, though yields ease on Friday. Market attention remains on the United States’ growing debt burden, which stands at $36 trillion, following a recent downgrade by Moody’s.
A new tax bill that passed the House may add further pressure as it heads to the Senate. The British pound rises 0.9% to $1.3533 and posts a weekly gain of 1%, its best in five weeks.
