In the Age of Trump, the Dollar No Longer Seems a Sure Thing<br />There’s the risk that at 3 a.m., Trump tweets something and the dollar gets hit.”<br />Before Mr. Trump was even sworn in, many investors were buying into the so-called Trump trade, a bet<br />that the new president’s plans for tax cuts, deregulation and a hefty dose of infrastructure spending would spur economic growth.<br />“The potential for serious investment and tax reform<br />and economic growth in the United States is unlikely to be realized,” said Ian Goldin, a former World Bank vice president and now professor of globalization and development at the University of Oxford.<br />Yet the Trump trade was also a wager that the dollar would climb as investment flooded into the United States to exploit fresh growth opportunities.<br />But given that the United States imports more than it exports, a cheaper dollar effectively<br />increases prices on wares for American consumers, from clothing to electronics to tools<br />Yet on Wednesday, in the hours after President’s Trump’s threat to unleash “fire<br />and fury” on North Korea if it continued to menace the United States, global investors sold the dollar.<br />“Foreign exchange markets were persistently discounting Europe’s strength,” said Adam S. Posen, a former official at the Bank of England,<br />and now president of the Peterson Institute for International Economics in Washington.<br />A weaker dollar also makes vacations in the United States cheaper, attracting more international tourists<br />and bolstering employment in the hospitality industries.
