Commerzbank's Thu Lan Nguyen points out that recent decisions by the US Supreme Court have created confusion around US tariff policies. In response, President Trump announced new global tariffs and later increased them. She says that financial markets have been paying close attention to the financial effects of these tariffs and how they are used as a tool in foreign policy. This has led to questions for investors in the Dollar about what other tools might be used if tariffs are limited or not allowed anymore.
Tariffs are a major tool used by the dollar policy to influence economic conditions.
How have the foreign exchange markets responded to recent events? The dollar dropped on Friday following the news about the court ruling. Although the decline wasn't very large, the market reaction is still significant.
However, the market seemed to focus on another key point: the fact that tariffs are a major source of money for the government's plans to spend more. Not only would reducing the tariffs take away a future source of income for the US Treasury, but the tariffs that have already been collected might need to be given back.
This issue now appears to be handled by the government, which has made it clear it will find other ways to keep charging tariffs. Don't be confused by the fact that the new global flat tariff is only allowed to stay for 150 days. There are several other sections the administration can use to impose tariffs.
We can be sure that the people in the White House will do everything they can. They won't worry about the money costs or how tariffs might affect trade. One thing is clear: from the US president's point of view, tariffs are the main tool for pushing forward foreign policy goals.
As a USD investor, I would be more worried about the tools he might use than about any tariffs.
Tariffs are a major tool used by the dollar policy to influence economic conditions.
How have the foreign exchange markets responded to recent events? The dollar dropped on Friday following the news about the court ruling. Although the decline wasn't very large, the market reaction is still significant.
However, the market seemed to focus on another key point: the fact that tariffs are a major source of money for the government's plans to spend more. Not only would reducing the tariffs take away a future source of income for the US Treasury, but the tariffs that have already been collected might need to be given back.
This issue now appears to be handled by the government, which has made it clear it will find other ways to keep charging tariffs. Don't be confused by the fact that the new global flat tariff is only allowed to stay for 150 days. There are several other sections the administration can use to impose tariffs.
We can be sure that the people in the White House will do everything they can. They won't worry about the money costs or how tariffs might affect trade. One thing is clear: from the US president's point of view, tariffs are the main tool for pushing forward foreign policy goals.
As a USD investor, I would be more worried about the tools he might use than about any tariffs.
