Donald Trump made it very well known that he was planning on implementing tariffs as soon as he was in the White House. After a Wall Street Journal article on how Trump would not do this immediately, the value of the dollar dropped today, inauguration day. European markets increased today as the pan-European STOXX rose by about 0.03% while the dollar weakened. That increase is much less significant than the decrease in the dollar value, which was 1.3%. This makes the dollar much weaker compared to the currencies of major US trading partners, such as Mexico, Canada, and China.
Donald Trump still plans to impose major tariffs after he takes office. He has threatened a 60% import tax on Chinese goods, 25% on Canadian goods, and 10% on goods not made in the United States. Trade experts expect this to lead to uneasy trade flows, increased prices for American consumers, as well as invite retaliatory import taxes from other countries.
What Happens When the Dollar falls in Value?
When the US Dollar is worth less in the eyes of other countries, they can purchase goods at a lower total price. This may help emerging countries with significant amounts of debt to the US, as they can use the same amount of money in their currency to repay more total debt. Essentially, this means that buyers find US exports more attractive, and US companies importing goods from other countries will face higher costs. Additionally, American travelers should expect to pay higher prices when traveling internationally, as the dollar does not hold as much strength as in the past. For you and I, that may mean that purchasing tickets for the next family vacation internationally may be better done sooner rather than later.
While it’s impossible to predict everything financial and economic that will happen during Donald Trump’s presidency, at Due.com, we make sure you are up to date on all aspects of finance and the performance of Markets.
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