President Trump announced sweeping 50% duties on Brazilian imports and another 50% duties on copper, with effect from 1 August. Markets immediately reacted as Brazilian assets weakened, and the changes in FX markets were felt.
Risk is being reassessed by FX traders around the world, with obvious strengthening of USD and FX volatility evident in Asia. Those measures show a sharp escalation of Trump’s ongoing trade war style.
What Do Trump’s Brazil and Copper Tariffs Say?
The 50% tariffs hit Brazilian exports and global copper supply. Analysts interpret the move as politically coined, with Trump’s stance seeming to benefit Brazil.
Brazilian stocks listed in the USA were down in after-hours trading. Brazil’s real dropped more than 2% following the tariff announcement.
Tariffs could have their perturbations for copper markets, an intermediate input in global industry.
U.S. President Donald #Trump has delayed his so-called “reciprocal” #tariffs once more. The new deadline is August 1. He has sent letters to 14 countries warning that tariffs of 25 to 40 percent will apply if no trade deal with the U.S. is reached by then. pic.twitter.com/7NAvKHAUnn
— Statista (@StatistaCharts) July 10, 2025
FX Markets React Swiftly and Sharply
The US dollar softened slightly during Asian hours. USD/JPY sold off from sub-145.80 and then back to above 146.20 amid choppy flows.
Commodity currencies like AUD, NZD, CAD, and EUR posted modest gains. With a rising risk sentiment being priced in, FX volatility peaked.
Emerging-market currencies, especially the real, took a beating against the dollar.
FX Markets Swing on Tariff Shock.
What Does This Mean for Global Risk Appetite?
Analysts warn that the tariff escalation is stirring a risk-off sentiment. Global markets can witness a decline in appetite for emerging-market assets.
High-beta currencies such as the real and peso remain under pressure. Yield in Brazilian bonds has spiked, as the country risk was reassessed. Central banks and fund managers are adjusting their hedging strategies.
JPMorgan and Goldman & Industry Reaction
Daiwa Finance has suggested a fall in Japan’s GDP of 1.1 % on application of 25 % tariffs. Given this, Ripple effects are expected through Asia Pacific.
Rabobank revises its EUR/USD outlook, anticipating increased volatility ahead. With coordination on interest rates before them, BoE and Fed officials are watching closely. EC comments and those of the BOJ will be keenly analysed for clues on policy this week.
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How Will This Affect Commodity Prices and Trade?
Copper is the cradle for a broad variety of industries, ranging from electronics to building. A 50% US tariff has been threatening global copper prices and flows.
China’s demand may compensate for some of this effect, but supply may also be tightened. Almost all large copper producers will have to reroute shipments away from the US.
This will probably favour global copper benchmark pricing but exert some pressure on the margins.
Central Bankers and Geopolitical Tensions Are Heating Up
Regional heads from the Fed, ECB, and BOE are scheduled to speak this Thursday. Markets will focus on any comment relating to inflation pressures linked to trade.
In a separate development, France and the UK pledged nuclear deterrence in concert for Europe. These developments came alongside China’s promotion of new economic policies to stabilise employment. FX markets will digest these developments in the evolving global risk sentiment.
What Is the Outlook for FX in the Coming Weeks?
Expect choppiness to continue in USD strength and FX volatility. Analysts believe USD/JPY will take a look at 147 if sentiment deteriorates. If commodity flows stabilise, this will be slightly advantageous for AUD/USD.
Trader positioning data holds the emerging-market weakness as a theme. The FX crowd will be closely watching trade negotiations and central bank cues.
Trade War Escalation Could Bring About More Spillover Ramifications
The double tariff on the import of brass and copper has opened up a new front of the trade war in the American way. Tariffs on capital goods and in metals exert strain on global supply chains.
Asia-Pacific exporters are anticipating knock-on costs and market disruptions. FX markets may become whipsawed on any correlating headlines. Investors would be closely observing any hints of negotiation or retaliation.
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Conclusion
Simultaneous imposition of 50% tariffs on imports from Brazil and on copper by President Trump has awakened FX markets, particularly in the Asian-Pacific. The USD still appears jittery as emerging-market currencies move away. Commodity currencies briefly found relief but FX volatility remains elevated. Corporate and central bank watchlists continue brimming with indicators: from Fed and ECB speeches to the trend in Brazil and copper pricing. With global trade tensions rising, FX traders are facing weeks of uncertainty and market sensitivity. The backdrop is USD strength, risk sentiment tightening, and trade risk premium being recalibrated.
The key for investors now is to track policy announcements, tariff negotiations, and central bank reactions – all while markets brace for further spill‑over from this trade escalation.
