After sparking a trade war by imposing exorbitant customs duties, Donald Trump is preparing a new offensive. The American president this time wishes to depreciate the value of the dollar by 30%. A shock that could once again shake the financial markets.
Currently, one euro is equivalent to approximately $ 1.10. According to Donald Trump and his advisers, the value of the dollar is overvalued and feeds the deindustrialisation of the United States. For them, the dollar is expected to be $ 1.50 per euro. In a protectionist logic, Trump wants to weaken the value of the dollar to make American products cheaper abroad And thus promote exports and therefore American industry.
By weakening the dollar, products from abroad also become more expensive. What encourage the American consumer to buy local. A goal that goes hand in hand with the increase in customs tariffs.
The risks of a weakening of the dollar
Deprecating the dollar is a risky bet since this can cause inflation. Imported products or products that require imported raw materials, become more expensive, American households therefore lose purchasing power.
The dollar is above all the international reference currency. A status which gives it significant value because demand is constant, 60% of world reserves are in dollars. In the event of depreciation, the stability of the financial markets could be impacted again and the hegemony of the dollar called into question.
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