Trump’s trade wars: economist explains possible consequences for the dollar and yuan
5 March 12:28
OPINION
US President Donald Trump continues to pursue a tough trade policy, imposing tariffs on goods from a number of countries, including Canada, Mexico, and China. This has already caused some negative reactions in financial markets and raises questions about the possible consequences for the stability of the dollar in the world. Komersant ukrainskyi asked economic expert Andriy Novak whether such a policy will affect the US dollar, which is the most important currency in the world markets, in the first place.
“Today, there is a certain negative reaction to Trump’s first actions in the markets, both currency and stock markets. In particular, the Dow Jones and NASDAQ indices have fallen by several percent,”
– says the expert in an exclusive commentary .
He explains that so far, there is no direct impact of Trump’s trade wars on the US dollar, but it may appear in the future.
“We can expect the US dollar to depreciate. After the introduction of duties against former strategic partners, such as Europe and Canada, there may be a tendency for these countries to reduce the share of their foreign exchange reserves in the US dollar in favor of other so-called hard currencies,”
– explains Novak.
As for the Chinese yuan, no significant fluctuations have been recorded so far. However, according to the economist, the situation may change in the next few weeks.
“The imposition of duties against China and China’s counter-duties against the United States may eventually also have a reaction on the Chinese yuan. But this reaction will be in a few weeks, not earlier,”
– the expert notes.
Thus, a new wave of trade restrictions by the United States could have far-reaching consequences not only for individual economies but also for the global financial system. The reaction of international markets is expected to be more pronounced in the coming weeks.
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Trump’s trade wars
Donald Trump’s administration has imposed trade restrictions on China, Mexico, and Canada, the three largest trading partners of the United States.
These measures have caused concern among US companies that depend on metal imports from Canada and Mexico. They are expected to look for alternative sources of supply, in particular in the Middle East, India, Chile and Peru, which could lead to higher prices for aluminum and copper in the United States.
In addition, Canadian consumers reacted to the imposition of the duties by boycotting American goods, canceling trips to the United States and refusing to buy American alcohol.
After negotiations with the leaders of these countries, President Trump agreed to postpone the introduction of tariffs for Mexico and Canada for 30 days. However, this deadline expired on March 4.
Economists warn that such trade disputes could slow global economic growth and cause inflation. Stock markets in the Gulf countries had earlier reacted with a decline due to fears of a possible trade conflict. The cryptocurrency market also collapsed earlier.
