Global stocks dip as US tariff hike sparks concerns

Global stocks slipped on Tuesday as investors weighed the implications of fresh U.S. tariffs and comments from Federal Reserve Chair Jerome Powell on the economic outlook.

President Donald Trump on Monday raised tariffs on steel and aluminium imports to 25 per cent from the previous 10 per cent, removing country exceptions and product-specific exclusions. He also announced plans to introduce global reciprocal tariffs in the coming days, Reuters reports.

However, he hinted at a possible exemption for Australia, stating that the steel and aluminium measures would only take effect from March 4, fuelling speculation that the tariffs may serve as a negotiating tool.

According to Reuters, the move triggered a backlash from key trade partners, with Mexico, Canada, and the European Union strongly condemning the decision. The EU vowed to implement “firm and proportionate countermeasures” in response.

On Wall Street, stocks pared losses slightly as investors looked to Powell’s remarks for indications of whether the tariffs could impact the Federal Reserve’s monetary policy stance. Powell, in his opening statement at a Senate Banking Committee hearing, said the Fed remained in no rush to cut interest rates, citing a “strong overall” economy with low unemployment and inflation staying above the central bank’s 2 per cent target.

The Dow Jones Industrial Average fell 35.11 points, or 0.08 per cent, to 44,434.21, while the S&P 500 declined by 5.56 points, or 0.09 per cent, to 6,060.98. The Nasdaq Composite also lost 13.62 points, or 0.06 per cent, closing at 19,701.77.

The MSCI index tracking global stocks dipped 0.10 per cent to 872.90, while the pan-European STOXX 600 rose 0.2 per cent, hitting an intraday record for the second straight session.

Meanwhile, U.S. Treasury yields climbed after Powell’s statement, with the yield on 10-year benchmark notes rising by five basis points to 4.545 per cent.

In the currency market, the dollar index, which tracks the greenback against major currencies, slipped 0.24 per cent to 108.10. The euro gained 0.34 per cent to trade at $1.034, while the Japanese yen weakened, pushing the dollar up 0.39 per cent to 152.58. The British pound also firmed 0.38 per cent to $1.2412.

Oil prices advanced on concerns over potential supply disruptions from Russia and Iran, although the tariff uncertainty capped gains. U.S. crude rose 1.05 per cent to $73.08 per barrel, while Brent crude climbed 1.16 per cent to $76.74 per barrel.