Trump's tariff threat hits the US dollar hard, boosting demand for safe-haven assets like metals and the Swiss franc. Copper prices are approaching $13,000.

According to analysts, US President Donald Trump is considering imposing a 10% tariff on European countries involved in his proposed acquisition of Greenland. This move has increased uncertainty in US policy direction, leading to a 0.1% decline in the Bloomberg Dollar Spot Index during Asian trading hours and causing copper prices to resume their upward trend. Meanwhile, European currencies have received some support. Driven by increased demand for safe-haven assets, the Swiss Franc has outperformed other G10 currencies, and the Euro has rebounded from its lowest point in nearly two months. David Forrester, Senior Strategist at Credit Agricole CIB in Singapore, stated that Trump's tariff threat has once again triggered "selling of the dollar". Markets are also paying attention to "TACO trades", as Trump may use the tariff threat as a negotiation strategy, providing some support for the dollar. During Trump's presidency until 2026, the Euro is expected to be one of the biggest losers due to escalating geopolitical risks. Tariffs could bring cyclical headwinds to the Eurozone economy and further weaken pressure on Russia to end the conflict in Ukraine. Chris Weston, Head of Research at Pepperstone Group Limited, noted that market dynamics show a significant increase in the political risk premium for US assets, including the dollar. This will force foreign investors to reduce or lower their holdings of US assets. There is a general belief in the market that an agreement regarding Greenland will eventually be reached. However, when sovereignty is threatened, there is concern that this could lead to a much more dangerous situation. Richard Franulovich, Head of FX Strategy at Westpac Banking Corporation, stated that Greenland/geopolitical risk has reignited discussions about de-dollarization and has made the US's large net international liabilities its key vulnerability. Mingze Wu, a forex trader at Singapore StoneX, said, "We've seen some weakness in the dollar, which makes sense as the US goes back to isolationism. However, the market has become quite numb to tariff issues, so the reaction may be subdued." Hikaru Tanaka, a fund manager at Asset Management One in Tokyo, mentioned that deteriorating inflation indicators in Europe, along with increasing tensions between Europe and the US, are making conditions more favorable for buying European bonds. These changes have led to a significant increase in precious metal prices as investors turn to safe-haven assets. Despite the possibility of the US-EU trade war having a negative impact on industrial demand, some funds are still flowing into the base metals market. As of the time of writing, copper prices on the London Metal Exchange have risen by 1.3% to $12,965 per ton. Nickel prices rose by 2.6%, tin prices by 2.8%, and aluminum prices by 0.8%. Copper prices have been rising steadily for the past five months, benefiting from supply shortages and demand supported by the artificial intelligence boom, driving consumption of this metal used in wiring and renewable energy equipment. Wu Kunjin, Head of Base Metals Research at Minmetals Futures Co., stated that as market optimism towards metals heats up, "copper prices are following silver and gold prices".