The Dollar Index (DXY) is now trading around 0.9% lower month to date, despite the volatility in markets. In part, this is because if higher tariffs weaken the US economy, the Federal Reserve has much more room to ease monetary policy than its counterparts.
With US tariffs surging from 2.5% to 25%, global trade and investment flows face a historic restructuring. Through an Emerging Markets lens, how are these times affecting places around the world?
CIO believes 2 April will likely mark a before-and-after moment for the global trading and financial system, estimating that the effective US tariff rate has surged to approximately 25%, up from just 2.5% prior to the US election. This figure may climb even higher in the near term, particularly if currently exempted sectors like semiconductors and pharmaceuticals are affected, or if the administration escalates its response to retaliatory measures from trading partners.
President Trump announced one of the biggest changes in US economic policy in a generation, and we could enter a downside scenario if the White House does not take active steps to reduce tariffs.
Markets have been digesting the impact of President Trump’s changes in US economic policy, with equities falling sharply, bonds and gold rallying, and the US dollar depreciating against most major currencies. In this note we consider some ways to not only manage volatility, but also to take advantage of it.
It's never easy to go through a market sell-off. When we see our hard-earned dollars dwindling in value, it's natural to feel anxious about what this might mean for our families and our ability to achieve our goals.
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