The US dollar has lost its status as a safe-haven currency due to President Donald Trump’s chaotic tariffs, sparking trade turmoil and undermining decades of trust in the world’s reserve currency. The sudden loss of confidence has been evident in the Treasury market, where borrowing costs have increased significantly since 1982.
Experts warn that the dollar’s standing as a reserve currency is being challenged by Trump’s recent moves on trade, including hefty tariffs on major economies and an abrupt U-turn on his decision. This has led to a massive shift in US dollar swap spreads, sharp increases in US Treasury yields, and a heavy selloff in the dollar.
The loss of confidence in the dollar has significant implications for investors, as it could lead to higher interest rates for longer, affecting bonds and equities. Foreigners own $33 trillion of US debt and stocks, making their reliance on the US economy vulnerable to changes in the currency’s value.
“The Trump administration’s agenda seems oblivious to America’s extreme dependence on foreign capital,” said Chris Wood, global head of equity strategy at Jefferies. “This erosion of confidence is bad news for investors.”
Source: https://www.reuters.com/markets/currencies/mighty-us-dollar-feels-heat-trumps-tariffs-spark-trade-turmoil-2025-04-11