Trump’s imposition of additional tariffs has been implemented much more rapidly than anticipated, sending shockwaves through the markets. Following China’s DeepSeek initiative, Trump’s aggressive tactics are further fueling market fears, with optimism regarding the Fed’s interest rate cuts also dampened. Kevin C. Smith, CEO of Crescat Capital, has weighed in on these recent developments.
The Dollar’s Outlook and Economic Impact
Kevin C. Smith has highlighted that this aggression could have detrimental effects on the global economy at a time when the dollar’s dominance is already being felt. With global central bank assets at a four-year low, Trump might be risking a significant gamble.
Smith expresses concern that the rising pressure on the dollar might lead to its organic devaluation against other currencies. He suggests that this scenario seems inevitable, indicating that the U.S. dollar may be nearing a cyclical peak.
“Moreover, global central bank assets have decreased to their lowest level in four years, largely due to the strength of the dollar suffocating the global economy. We believe coordinated or organic depreciation of the dollar against other currencies is unavoidable.”
The Effects of Additional Tariffs
Smith also points out that Trump’s tariffs could lead to short-term economic disruptions. Trump mentioned that he might not take these impacts seriously, while the White House spokesperson emphasized their determination to move forward. Starting Tuesday, prices for about 33% of U.S. imports, including the 10% tax on Chinese goods, will be driven up due to Trump’s actions.
This could affect supply chains across various sectors, from agriculture to automotive, potentially disadvantaging U.S. citizens early on. The disruptions are particularly concerning given the $46 billion agricultural trade with Mexico and $97 billion energy trade with Canada.
In conclusion, Smith stated:
“A frequently overlooked factor in the dollar’s recent strength is the potential impact of trade policies, especially the lasting effects of Trump’s tariffs. Though these measures may create a short-term shock, they represent only one aspect of the broader policy agenda of the new administration.”
Disclaimer: The information contained in this article does not constitute investment advice. Investors should be aware that cryptocurrencies carry high volatility and therefore risk, and should conduct their own research.
