By Denna Bowman
The effects of the US administrations decision to impose steep tariffs on tyres imported from China, is already starting to reverberate around the world.
The Australian dollar closed lower on Monday after the ruling prompted a fresh bout of US dollar buying, according to a report in the Sydney Morning Herald.
Westpac Banking Corporation currency strategist Jonathan Cavenagh said the Australian dollar was under pressure after the US government said it would impose duties on Chinese tyres imports.
Mr Cavenagh said: “When you don’t really have any other news on the day and you get something like that coming out, it seemed to spook markets somewhat.
“The US dollar has caught a bit of a safe-haven bid from there.”
Although China could retaliate with tariffs on imported US car products and poultry, Mr Cavenagh said the value of those goods was “very small”.
He added: “I think the market is more trading off the fear factor rather than anything else, in terms of what it may turn into or escalate into potentially down the track.”