Dollar Weakens After Supreme Court Tariff Ruling as Trade and Iran Risks Unsettle Markets

The U.S. dollar slipped on Monday after a Supreme Court ruling against President Donald Trump’s sweeping tariff measures injected fresh uncertainty into U.S. trade policy, compounding existing concerns over rising geopolitical tensions with Iran.

The euro rose 0.2% to $1.1808, while sterling gained 0.3% to $1.3519. The dollar also eased 0.2% against the Japanese yen, trading at 154.745 yen.

On Friday, the U.S. Supreme Court ruled that Trump had exceeded his authority in imposing broad-based tariffs, a decision that prompted the president to sharply criticize the court and announce a new blanket 15% levy on imports. Trump also insisted that higher-tariff bilateral deals with key trading partners should remain in force.

The ruling and the administration’s swift response have added to uncertainty in currency markets, which are already grappling with shifting interest rate expectations and heightened geopolitical risks. Trump’s replacement tariffs are set to run for 150 days, but it remains unclear whether the United States will be required to refund importers for duties already paid under the now-invalidated measures—an issue the court did not address.

Analysts warn that the ruling could trigger years of legal challenges and renewed economic disruption, as the administration seeks alternative legal pathways to reinstate global tariffs on a more permanent basis.

Trade partners have also reacted cautiously. On Sunday, the European Commission called on Washington to honor a trade agreement reached last year with the European Union, which includes zero tariffs on certain goods such as aircraft and spare parts. Meanwhile, U.S. partners across Asia were assessing the implications of the decision, as were investors who have previously been caught off guard by market reactions to Trump’s trade policies—measures that have so far failed to narrow the U.S. trade deficit.

Middle East Tensions Add to Market Unease

Beyond trade policy, concerns over a potential military confrontation between the United States and Iran have added another layer of uncertainty to global markets. Although the two countries are scheduled to hold a third round of talks on their nuclear dispute later this week, Trump has ordered a significant buildup of U.S. military forces in the Middle East.

Iran is one of the world’s largest oil producers, and any conflict could have far-reaching consequences for energy markets. Tehran has previously threatened to close the Strait of Hormuz, a vital shipping route that carries roughly one-fifth of global oil flows, raising fears of severe disruptions to global supply.

In this environment, investors are seeking alternative hedges. Goldman Sachs analysts said the Swiss franc remains their preferred inflation hedge, with the currency rising 0.3% to 0.7736 francs per dollar on Monday.

Overall, the combination of legal uncertainty over U.S. trade policy and escalating geopolitical risks continues to weigh on the dollar, keeping currency markets on edge at the start of the week.