Trump trade mayhem will steepen yield curve and weaken the US dollar
Larger damage to greenback will be seen in the long run, as tariffs force countries to diversify their trade away from America to other economies
ON AUG 1, US President Donald Trump finalised reciprocal tariffs announced in April, bringing a measure of relief to Asian economies that secured rates at or below 20 per cent.
However, uncertainty over these deals, coupled with a potential slowdown in the global and US economies in the second half of the year, explains why the US yield curve may steepen further and in turn drive the greenback lower.
The larger damage to the US dollar, however, will be seen in the long run as tariffs force countries to diversify their trade away from the US to other economies. This will reduce the use of, and reliance on, the US dollar in global trade, which will erode its value.
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