Trump’s Trade Policies Send US Dollar into Sharp Decline
The US dollar is experiencing a significant downturn as President Donald Trump’s unpredictable trade policies undermine America’s economic credibility and raise concerns about a potential self-inflicted recession.
Dollar Hits Three-Year Low Against Euro
The greenback fell another 2% on Friday, reaching a three-year low of $1.14 against the euro before recovering slightly. This marks a dramatic reversal from its post-election surge when Trump’s promises of tax cuts and deregulation initially boosted the currency.
Economic Consequences of a Weaker Dollar
The dollar’s decline could trigger several economic challenges:
- Higher import prices driving inflation
- Reduced corporate profit margins
- Decreased attractiveness to foreign investors
Adam Button of ForexLive noted, “The US was really at its peak. Now it’s slipping in dramatic fashion.” The euro has gained nearly 10% against the dollar since Trump’s inauguration.
Trade Policy Turmoil Impacts Markets
Trump’s inconsistent tariff announcements have created market instability. After implementing broad tariffs last week, the administration quickly rolled back some of the most severe measures this week.
“Modern markets have never dealt with this kind of shock,” Button added, referring to the unprecedented nature of current trade tensions.
Long-Term Damage to Dollar’s Status
George Saravelos of Deutsche Bank warned that despite policy reversals, “the damage to the USD has been done.” Markets are reassessing the dollar’s role as the global reserve currency amid growing “de-dollarization” trends.
While some tariffs were suspended, significant measures remain, including:
- 10% universal duties on many imports
- 145% tariffs on Chinese goods
- Sector-specific levies on steel, aluminum, and autos
Global Recession Fears Grow
JPMorgan Chase now considers a global recession its “baseline forecast” as tariff impacts spread. Investors are shifting to safer assets like gold and the Swiss franc amid the uncertainty.
South African Rand Benefits from Dollar Weakness
The rand strengthened to R19.18/$ as the dollar declined, up from R19.75/$ earlier in the week.
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By Garrin Lambley © Agence France-Presse