US President Donald Trump’s trade policy is having a significant impact on global markets, with investors seeking safe-haven assets outside of the US. The dollar index has lost about 9% since Trump returned to office in January, putting it on course for its worst performance during the first 100 days of a presidency since Nixon’s era.
The White House aims to rejuvenate domestic manufacturing and improve national security through tariffs, but this policy shift is being felt worldwide. China remains heavily reliant on foreign demand, while South Korea’s exports to the US declined by 14.3% in April. Germany’s economy is also expected to struggle, with forecasters predicting stagnation.
The US economy is projected to expand 1.4% in 2025, down from 2%, and there’s a growing chance of a downturn in the next 12 months. Canada’s new prime minister will face an immediate test of governance as they inherit a half-year of flat economic growth.
Global growth is expected to slow further, with the International Monetary Fund cutting its projection to 2.8%. The IMF warns that US President Trump’s tariffs are sparking a global trade war, which could lead to a weaker outlook.
The impact of Trump’s trade policy extends beyond economies, as California Governor Gavin Newsom boasts about his state becoming the world’s fourth-largest economy. However, central banks in Indonesia, Paraguay, Russia, and Uzbekistan kept interest rates unchanged this week, indicating caution ahead.
Source: https://fortune.com/article/us-dollar-slide-evocative-of-nixon-era