Trump’s Presidency and the Initial Surge of the US Dollar President Trump took office in January 2025, bringing with him a strong manifesto aimed at transforming the US economy and restoring the glory of “The Great US Dollar.” His campaign promises convinced many that his leadership would improve the economy, a sentiment reflected in the dollar’s immediate performance after his inauguration. On January 20th, 2025, the US dollar triumphed against major currencies, appreciating by 0.8% against the Canadian dollar and 0.95% against the Mexican peso. This surge was driven by Trump’s proposed economic policies, including tariffs on imports from Mexico and Canada and equal tariffs for countries using the VAT system.

The Decline of the US Dollar and Economic Concerns
Despite the initial optimism, the US dollar began to decline in global markets by March 2025. The US dollar index (DXY) showed a 4.5% drop since January, nearing its lowest point since November 2024. The euro reached its strongest streak against the dollar in February 2025, adding pressure to the currency. While Trump emphasized economic growth, US stocks painted a different picture, with investors pulling out due to worsening economic data. The depreciation of the dollar raised questions about the effectiveness of Trump’s trade policies and their impact on the economy.

Impact of Trade Policies and Investor Sentiment
Trump’s aggressive trade policies aimed at restoring the US economy have had unintended consequences. Analysts suggest that the dollar’s depreciation reflects weak economic momentum and declining confidence in growth prospects. Many countries that anticipated profitable trade with the US now face barriers, leading to reduced foreign investment. The Chinese yuan has appreciated against the dollar over the past 16 months, driven by China’s economic resilience and the instability of US markets. Investors have shifted their focus to international markets, favoring European companies like Nestle, Volkswagen, and ASML, as well as Chinese firms such as Alibaba, JD, and Baidu.

Global Investment Trends and Economic Shifts
Ongoing trade wars and economic uncertainties have contributed to a shift in global investment patterns. The East and West have been engaged in an economic rivalry, with countries like China challenging the US’s position as an economic giant. Investors are diversifying their portfolios, exploring resilient markets like Hong Kong and Europe. This trend, combined with Trump’s trade policies, raises concerns about the US’s ability to grow its markets and maintain its economic dominance.

The Risks of Isolationist Policies
Trump’s proposed trade policies, seemingly aimed at isolating the US from other countries, may not achieve the intended economic stability. Instead, these actions risk uplifting competitors while further weakening the US economy. The depreciation of the dollar and the bearish market trends signal the need for the US to reconsider its approach. Economic policies must align with global trajectories to avoid isolation and ensure sustainable growth.

The Need for Strategic Adaptation
While Trump’s ambition to restore the US economy is evident, the current challenges highlight the importance of strategic adaptation. The US must acknowledge the role of competition in global trade and develop policies that enhance its competitive edge without isolating itself. By fostering collaboration and addressing global economic shifts, the US can work toward maintaining its position as a leading economic power.