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Gertrude Chavez-Dreyfuss Reuters Friday, March 2, 2018
NEW YORK -- The U.S. dollar could face headwinds if President Donald Trump's proposals to impose stiff tariffs on steel and aluminum imports are enacted, with the biggest risk stemming from the possible flight of capital flows needed to finance ballooning U.S. deficits.
Currency markets, in general, dislike any form of trade intervention and previous protectionist efforts by the U.S. government have resulted in dollar weakness.
"The U.S. is now in a very precarious position because it's putting a risk premium on U.S. assets by introducing tariffs and going down this protectionist route, which is negative for growth," said Mark McCormick, head of North American FX strategy at TD Securities in Toronto.
The introduction of import tariffs threatens to increase the price of foreign products in the United States, reducing demand and imports.
Tariffs introduced by Presidents George W. Bush and Bill Clinton in 2002 and 1995 resulted in a 15 percent decline in the dollar overall, according to estimates from TD Securities, although there were other factors that also undermined the U.S. currency during those periods. ...
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https://www.reuters.com/article/us-global-for...alysis/u-s-d... * * *
