This decline is particularly concerning as Australia's economy is heavily reliant on the health of the Chinese economy, which drives demand for key exports like Iron Ore, valued at $118 billion annually.

Experts warn that the depreciation of the Australian dollar will lead to higher prices for consumers, especially for imported goods from the US and travel to popular destinations.

In retaliation to US tariffs, China has imposed a 34 percent tax on all US imports, effective April 9, 2025, which has intensified fears of a trade war.

Recent US labor market data showed an increase in Nonfarm Payrolls by 228,000 in March, which has led to speculation that the Federal Reserve may delay interest rate cuts until June 2025.

Economists suggest that the ongoing tariff dispute may prompt further interest rate cuts in Australia to stimulate economic growth, as tariffs are expected to slow the economy.

A weaker Australian dollar increases the cost of imported goods, further impacting consumers and raising concerns about inflation.

The Australian dollar has plummeted to its lowest value in five years, reaching US59.33 cents before recovering slightly to just above US60 cents, largely due to escalating trade tensions between China and the United States.

The Australian Securities Exchange (ASX) is expected to drop by 4.29 percent when it reopens, reflecting significant losses in US markets and growing fears of a global recession.

Diana Mousina, deputy chief economist at AMP, indicated that the currency's drop was anticipated following US tariff announcements that exceeded market expectations.

Rodrigo Catril, a senior foreign exchange strategist, characterized the Australian dollar's current status as 'in no man's land' amidst increasing trade volatility.

Iron Ore prices play a critical role in influencing the AUD; rising prices typically strengthen the currency, while falling prices contribute to its decline.

The decline in share values has negatively impacted Australians' superannuation balances, raising concerns about retirement savings.