**Trump’s Tariff Threat on China Sinks US Dollar and Rattles Global Markets**
*Adapted from original reporting by FXStreet, with additional analysis and context drawn from Reuters, Bloomberg, and other financial news sources.*
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### Overview
The US dollar came under significant pressure after former President Donald Trump issued fresh threats of imposing further tariffs on Chinese goods should he return to the White House after the 2024 US Presidential Election. This announcement triggered a wave of investor anxiety, reversing recent gains for the greenback and unsettling global markets already anxious about global growth, supply chains, and monetary policy outlooks.
Traders and analysts fear renewed hostilities between the world’s two largest economies could deal a blow to global trade and push up inflation, further complicating central banks’ fight against rising prices.
### Trump’s New Tariff Threats
– **Details of the Threat:** Trump, during a campaign-style event, suggested that if elected, he would raise tariffs on Chinese imports, raising the possibility of extending trade restrictions and sanctions he initiated during his first term in office (2017-2021).
– **Policy Specifics:** He advocated for a universal tariff on all goods coming from foreign countries, with a particular emphasis on Chinese products. Trump proposed tariffs as high as 60 percent on Chinese goods, aiming to protect domestic industries and reduce the US trade deficit.
– **Context:** These threats revive memories of the US-China trade war between 2018 and 2020, which rattled markets, aggravated supply chain disruptions, and dampened business investment globally.
### Immediate Market Reaction
– **US Dollar Index:** The US Dollar Index (DXY), which measures the dollar’s value against a basket of major currencies, slipped following Trump’s comments. After trading near its recent highs, the index dropped by as much as 0.5% intraday, signaling weakening investor confidence in the US currency amid rising protectionist risks.
– **Forex Market Movements:**
– The Chinese yuan (CNY) initially depreciated due to heightened trade tension fears but later stabilized after interventions from China’s central bank.
– Safe-haven currencies such as the Japanese yen (JPY) and Swiss franc (CHF) gained as traders moved assets out of the dollar and into perceived lower-risk alternatives.
– Commodity-linked currencies including the Australian dollar (AUD) and New Zealand dollar (NZD) faced volatility due to their countries’ close trade ties with China.
### Equity and Commodity Market Impact
– **Stock Indices:** US and global equity markets saw a pronounced selloff in the wake of the tariff threats. The Dow Jones Industrial Average, S&P 500, and Nasdaq all dipped, reflecting investor concerns about the future profitability of multinational firms and the global economic outlook.
– **Asian and European Stocks:** Key indices in Asia and Europe followed suit, reinforcing the widespread apprehension over a possible escalation in tariff-based trade hostilities.
– **Commodities:**
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