U.S. President Donald Trump has delayed the imposition of steel and aluminum tariffs on Canada, the European Union and Mexico until June 1, the White House announced late Monday, only a few short hours before the temporary exemptions for these countries was set to expire. The White House also permanently exempted Australia, Brazil and Argentina from the tariffs, though the deals have not yet been finalized. South Korea has also received a permanent exemption to the tariffs.
The tariffs are based upon a 1962 law that was meant to protect U.S. steel and aluminum producers on the basis of national security, but it has drawn harsh criticism from members of the World Trade Organization as well as from some members of the Republican Party who have argued that the tariffs would raise prices which would ultimately hurt the producers.
At the moment, Canada is the largest steel exporter to the U.S. Canadian Prime Minister Justin Trudeau said on Monday that any tariffs on Canadian steel and aluminum would be a sure way to damage trade relations between his country and the U.S. The EU has made similar comments and has threatened retaliation tariffs on U.S. products to the tune of 2.8 billion euros.
Now that the tariff issue has been partially resolved, traders can focus on the Federal Reserve meeting which is set to begin later today. The U.S. dollar floated near its 3 ½ month highs on Tuesday morning in Asia, though trading volumes were low as most Asian markets were closed for holidays. The dollar was trading at 109.37 against the yen as of 12:55 p.m. HK/SIN, and it was at $1.2072 against the euro.
Gold prices dropped for a second consecutive day on Tuesday morning as investors fled the safe-haven in favor of the dollar as they waited to hear from the Fed on Wednesday. Gold futures were down 0.48 percent just after noon in Hong Kong to $1312.90 per ounce. Silver and platinum were also trading lower on Tuesday.