Trump's Tariff Plans Are Weakening Dollar Sentiment, Driving Traders Toward Currencies Of U.S. Trading Partners

Trump's planned tariffs are weakening sentiment toward the U.S. dollar, prompting a shift in currency market positions, according to CNBC. The dollar index was flat Wednesday after peaking in mid-January and losing some gains made in late 2024. The dollar is viewed as a haven due to its role as the world’s reserve currency and dominance in global trade and finance. A stronger dollar makes U.S. exports more expensive, affects global capital flows, and influences monetary policy and earnings. Traders are turning bearish on the dollar and favoring currencies of major U.S. trading partners ahead of a possible multinational trade war, according to RSM’s Joseph Brusuelas.