New York Times: “One of the notable things about the ongoing rout in financial markets is the fact that dollar is also tumbling. That isn’t how it typically works. In bouts of volatility, the dollar tends to do well, serving as a haven for investors.”
“The move also undercuts one of the main arguments that Trump’s economic advisors have long promoted as to why tariffs would not be inflationary. They argued that tariffs would raise the value of the dollar, helping to offset the impact of rising prices. Some strategists say the drop — even after a slight rebound today — reflects intensifying fears of a U.S. recession because of tariffs. Others say it could reflect something even more pernicious: Investors are starting to question U.S. economic exceptionalism.”
The Economist: “Watching all this, it is reasonable to worry that as Mr Trump pulls up the drawbridge, the dollar’s role in the global financial system is in danger. America’s rivals and allies alike have long sought alternatives that are beyond Uncle Sam’s reach, whether by developing new payment rails or agreeing to invoice trade in other currencies.”
