Economics Weekly: Will Trump Weaponize the Dollar?

Friday, June 21, 2019

Mario Draghi just announced more stimulus could come, which immediately dropped the Euro against the Dollar, making it unfairly easier for them to compete against the USA. They have been getting away with this for years, along with China and others.
– Donald J. Trump (@realDonaldTrump), June 18, 2019

President Trump has been very vocal with regard to the Fed, its independence, and what he thinks the agency should be doing with interest rates. He has also had no qualms about being "a tariff man"—dishing out tariffs and/or threats thereof against U.S. trading partners deemed to be taking unfair advantage of the United States. Neither has he been shy in calling out real or alleged currency manipulating nations, as demonstrated in his tweet this week about the euro. What is perhaps strange, therefore, is how restrained he has been when it comes to pushing his own Treasury Secretary into responding to these perceived threats more directly through dollar depreciation and/or "weaponizing the dollar." In this week's Economic Weekly, we take a look at the dollar and why it could turn out to be the President's next avenue of attack in attempting to make the U.S. more competitive again, and how he might try to go about achieving this.

For a copy of this report or to subscribe to the Economics Weekly or Economic Indicators reports, please contact your William Blair representative.

Richard de Chazal, CFA is a London-based macroeconomist covering the U.S. economy and financial markets.

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