- The AUD/USD recovers about 0.6040 while Beijing discusses a new monetary stimulus to stabilize its economy.
- The growing commercial war between the US and China could tarnish the recovery movement of the Australian dollar.
- The fears of a possible recession in the US keep the US dollar at a disadvantage.
The Aud/USD pair bounces about 0.6040 in the European session on Monday since the new five years of 0.5930 previously registered in the day. The Australian torque wins as the Australian dollar (AUD) is strengthened after the senior officials of China consider accelerating the monetary stimulus to stabilize their markets against the new tariffs announced by the US president, Donald Trump, on Wednesday.
China’s attempt to stimulate its economic growth is positive for the Australian dollar, given Australia’s high dependence on exports to them.
However, the perspectives of the Australian economy remain uncertain since The Australian treasurer Jim Chalmers declared that the nation expects “great blows to us and Chinese growth”. In addition, rapid acceleration in moderate bets of the Bank of the Australian Reserve (RBA) due to Trump’s tariffs could affect audience performance.
The president of the USA, Trump, has announced reciprocal 54% tariffs on China in an attempt to correct a significant budget deficit. This has led to a commercial war between the two, since China has also proposed an import tax of 34% on the US as a countermelted.
In addition, Trump is reluctant to negotiate with Chinese officials to relieve tariffs, resulting in a greater escalation of commercial tensions between them. “They want to talk, but there is no conversation unless they pay us a lot of money,” Trump said during the weekend.
Meanwhile, the US dollar (USD) demonstrates high volatility, since investors expect Trump’s tariffs to drive an economic recession in the US this year. JP Morgan analysts expect the US economy to end the year with a 0.3% drop in the growth of the Gross Domestic Product (GDP).
Commercial War between the US and China Faqs
In general terms, “Trade War” is a commercial war, an economic conflict between two or more countries due to the extreme protectionism of one of the parties. It implies the creation of commercial barriers, such as tariffs, which are in counterbarreras, increasing import costs and, therefore, the cost of life.
An economic conflict between the United States (USA) and China began in early 2018, when President Donald Trump established commercial barriers against China, claiming unfair commercial practices and theft of intellectual property by the Asian giant. China took retaliation measures, imposing tariffs on multiple American products, such as cars and soybeans. The tensions climbed until the two countries signed the Phase one trade agreement between the US and China in January 2020. The agreement required structural reforms and other changes in China’s economic and commercial regime and intended to restore stability and confidence between the two nations. Coronavirus pandemia diverted the attention of the conflict. However, it is worth mentioning that President Joe Biden, who took office after Trump, kept the tariffs and even added some additional encumbrances.
Donald Trump’s return to the White House as the 47th US president has unleashed a new wave of tensions between the two countries. During the 2024 election campaign, Trump promised to impose 60% tariff particularly in investment, and directly feeding the inflation of the consumer price index.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
