The Truth About Trump’s Dollar Policy Revealed: Will the USD Weaken or Strengthen?
As the world eagerly awaits to see the impact of Donald Trump’s policies on the US dollar, experts are divided on whether his core policies will result in a weaker or stronger currency. Macquarie, a leading financial institution, suggests that while Trump has expressed a desire for a weaker USD, his tariff, immigration, and tax policies actually point towards a stronger dollar.
Trump’s tariff policies, industrial policies, immigration policies, and tax policies are expected to be inflationary, which could lead to an increase in real rates and a stronger dollar, according to Macquarie. However, some skeptics argue that a potentially strengthening dollar could force Trump to implement policies that would have a negative impact on the currency.
While there are several strategies Trump could pursue to weaken the dollar, such as pressuring the Fed to cut interest rates or selling dollars from reserves, Macquarie believes that these tactics would not be effective. The only viable option, according to Macquarie, would be for Trump to offer trade concessions to countries willing to revalue their currencies against the dollar. However, this approach would conflict with Trump’s pro-tariff agenda.
In the end, Macquarie predicts that Trump will likely accept a stronger USD resulting from his core policies, unless he is willing to make significant changes. The most logical step would be for Trump to lower tariffs on countries that revalue their currencies, but this would require a major shift in his current framework.
In conclusion, the future of the US dollar under Trump’s administration remains uncertain, but it is clear that his core policies will have a significant impact on the currency. Investors and individuals should closely monitor developments and be prepared to adjust their financial strategies accordingly to navigate the potential effects on their finances.