Brookings
·
Published
November 21, 2024

The dollar and global markets after the US election

Leans Left
Commentary
·
2024 U.S. Elections
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Summary

The U.S. dollar has seen a moderate increase since Donald Trump's election victory, reflecting expectations of fiscal easing and stronger growth. A larger surge in dollar strength may occur if tariffs are imposed on China, potentially leading to significant global financial impacts, per commentary from Brookings.

The U.S. dollar has seen a moderate increase since Donald Trump's election victory, reflecting expectations of fiscal easing and stronger growth. A larger surge in dollar strength may occur if tariffs are imposed on China, potentially leading to significant global financial impacts, per commentary from Brookings.

The issue:  

The dollar's rise is influenced by investor expectations of U.S. fiscal policy changes, similar to trends observed after the 2016 election. A potential new phase of dollar strength could emerge with tariffs on China, risking severe depreciation in emerging markets and affecting commodity prices.

What they recommend:  

No recommendations provided in the commentary.

Go deeper:  

The report highlights a historical precedent from 2018, where U.S. tariffs led to a comparable fall of the yuan against the dollar, affecting global markets negatively. Tariffs could prompt China to buy more U.S. goods, potentially harming countries like Brazil and the EU, which heavily export to China. This dynamic could tighten global financial conditions, increasing risks for the U.S. economy.

This is a brief overview of a commentary from Brookings. For complete insights, we recommend reading the full commentary.

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Original Read Time
9 min
Organization
The Brookings Institution
Category
Israel-Gaza War
Political Ideology
Center Left

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