Volatile Australian dollar tumbles on Trump tariffs

The news: The Australian dollar has tumbled in volatile trading after US President Donald Trump announced sweeping global reciprocal tariffs, prompting traders to turn cautious.

The numbers: The local currency was trading 0.88% lower at 62.38 US cents by 9.30am. It had earlier spiked to above 63 US cents after the greenback fell against most major currencies, before slipping again as details emerged on the tariffs imposed on countries around the world.

The context: Trump’s reciprocal tariffs included an exception for Canada and Mexico, but imposed a 10% baseline tariff on all imports and sharply higher rates for key countries like China and Vietnam. The US will impose 10% tariffs on Australia, with Trump singling out Australian beef exports while announcing the tariffs, saying Australia "won’t take any of our beef".

The announcement triggered a slide in financial markets and prompted traders to go into ‘risk-off’ mode. The Aussie dollar is generally seen as a 'risk currency' relative to the US dollar, meaning it typically depreciates in response to a negative change in risk sentiment.