Pushing the USD’s limits – DBS

Donald Trump's tariff policies and protectionist agenda pose long-term risks to the US dollar, destabilizing financial markets and eroding trust in American institutions that have supported the dollar’s dominance, DBS' FX analyst Philip Wee notes.

Trump's tariffs threaten Dollar stability

"The USD faces long-term downside risks due to Trump’s 'Make America Great Again' agenda, particularly his tariff proposals. These have shaken investor confidence in US economic strength, institutional trust, and geopolitical influence, threatening the USD’s dominance."

"Trump’s tariffs are expected to slow US GDP growth and increase recession risks, as businesses delay investments and consumers face higher prices and job uncertainty. The trade war with China has also lowered global growth projections, further undermining economic stability."

"Trump’s actions have eroded trust in US institutions, including the Federal Reserve’s independence, which may lead to increased political interference in monetary policy. Additionally, the administration's fiscal policy, including the push for tax cuts and deregulation, raises concerns about the sustainability of US economic foundations."