Dollar Credibility Test After Trump's 15% Tariff Threat
Trump's new tariff threat is a“major credibility test” for the US dollar, which has“just blinked,” warns the CEO of one of the world's largest independent financial advisory organizations.
The warning from Nigel Green of deVere Group comes as the world's primary reserve currency slides 0.3% against a basket of major peers, while gold rises 0.6% to $5,133 a troy ounce, after President Trump unveiled a new 15% flat-rate tariff following a Supreme Court ruling that his previous trade measures exceeded executive authority.
Futures tracking the S&P 500 point to a 0.5% decline and the Nasdaq 100 to a 0.7% fall.
Trump is invoking the 1974 Trade Act to impose the new tariff for up to 150 days after the Supreme Court ruled that earlier emergency powers had been used beyond their lawful scope.
The legal confrontation adds a layer of institutional friction to an already sensitive trade backdrop.
The timing is significant. The dollar's dominance has already faced gradual erosion through ongoing dedollarization efforts.
Several emerging and major economies have expanded bilateral trade settlement in local currencies, increased gold reserves, and diversified foreign exchange holdings over recent years.
Gold's 0.6% rise to $5,133 underscores that dynamic. Central banks globally have been consistent net buyers of gold in recent years, and renewed trade escalation strengthens the case for hard-asset buffers.
A weaker dollar has direct and varied market consequences.
For US investors, currency depreciation can lift multinational earnings when overseas revenues are translated back into dollars, potentially supporting equity valuations in export-heavy sectors.
At the same time, it can increase import costs, adding to inflationary pressure domestically.
For global investors, the implications are equally notable.
Tech stocks, which have driven record highs on AI and tech enthusiasm, were among the weakest segments in early trading. European technology shares fell 0.9%, and US Nasdaq futures indicated a 0.7% decline.
The 150-day window under the 1974 Trade Act provides a defined timeframe, yet markets extend beyond legislative calendars.
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