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Trump Administration’s Trade Policy Could Impact US Dollar and Asset Markets
Trump Administration’s Trade Policy Could Impact US Dollar and Asset Markets
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The Trump administration’s focus on reducing trade deficits, particularly in goods, signals a potential shift in global capital flows. As the world’s reserve currency, the US dollar has long benefited from a self-reinforcing cycle: foreign dollars earned through trade are reinvested in Treasurys and equities, artificially supporting both the currency and asset prices.
This dynamic has come at the cost of domestic manufacturing jobs. A deliberate weakening of the dollar—whether through trade policy or other means—could disrupt decades of financial market patterns. Cryptocurrencies often thrive during periods of dollar weakness, as investors seek alternatives to traditional reserve assets.
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