No tariffs on Day One from Trump? Sure, that’s made the dollar wobble—but let’s not kid ourselves. The tariff threats, trade drama, and inflationary fireworks are still there. Trump’s first 100 days are set to be a rollercoaster for the greenback.
The President’s reported plan to “study” trade relationships rather than unleash tariffs immediately is hardly a sign that he’s gone soft.
This is the man who has repeatedly promised to get tough on China, Mexico, Canada and Europe. Delaying the big moves? That’s just Act One.
The trade wars could still be coming; he’s just pacing himself in a strategic way to try and secure better negotiating angles. And markets, ever hungry for clarity, are left guessing about his next moves—which means the dollar’s volatility is likely here to stay.
Trade is only one piece of this messy puzzle. Trump’s tax cuts and spending plans could be about to light an inflationary bonfire. Massive infrastructure projects and sweeping tax breaks sound great in campaign speeches, but they also mean more government borrowing and, yes, higher prices.
Cue the Federal Reserve. The central bank has been trying to tiptoe through the rate hike minefield, but Trump’s policies will likely push it into a corner.
I believe that higher rates will stick around, whether the markets like it or not. A higher-for-longer Fed means the dollar could strengthen even as trade chaos lingers in the background. It’s a two-headed beast: fiscal fireworks on one side and trade turbulence on the other.
Trump has said he’d love a weaker dollar because it’s great for exporters. But you can’t just snap your fingers and make that happen. A weaker dollar requires more than bluster; it demands serious shifts in policy and sentiment. And while Trump’s trade sabre-rattling might spook the markets temporarily, a remarkably strong economy and hawkish Fed aren’t exactly recipes for a long-term dollar slide.
So, what does all this mean for the next 100 days? Volatility. The dollar will dance to the tune of every press conference, tweet, and policy hint.
Trade negotiations will keep markets on edge—China isn’t going to roll over, and neither will Canada or Mexico.
Meanwhile, inflation will be lurking in the background, forcing the Fed to stay hawkish even if it prefers to play nice.
For investors, this is the time to stay sharp. A strong dollar sounds like a good thing—until you remember it squeezes emerging markets already struggling with dollar-denominated debt. And if Trump’s tariff tirades weaken the currency instead? Inflation in the US could get worse.
This is the paradox of Trump’s economic agenda: he wants to Make America Great Again with big spending and tough trade policies, but those very policies could turn the dollar into an unpredictable player in global markets. Trade-offs, right?
Trump’s first 100 days are going to be anything but boring—for the dollar, for the Fed, and for anyone daring enough to bet against this drama.
Nigel Green is deVere CEO and Founder
Also published on Medium.
