Escalating U.S.-China Tariff Spat Fuels Pressure on Greenback
In recent days, U.S. tariffs on Chinese imports surged from 54% to 125%, while China retaliated by increasing duties on all U.S. goods to 84%.
The rapid escalation has stoked fears of a drawn-out economic standoff, weighing on investor sentiment and dampening demand for the dollar as a reserve currency.
Fed Signals Caution as Trade Risks Complicate Policy Outlook
Despite the greenback’s slide, downside pressure may be partially limited by recent comments from Federal Reserve officials. Chair Jerome Powell warned that rising tariffs could “intensify inflation while slowing economic growth,” making future policy moves less straightforward.
“We are in a position to wait for further clarity,” Powell said during last week’s remarks.
Daly: Inflation Risks May Limit Scope for Rate Cuts
San Francisco Fed President Mary Daly echoed a cautious tone, stating that while “a couple of cuts may still be appropriate,” inflation risks tied to geopolitical and trade developments could reduce the need for aggressive easing.
Her remarks add another layer of uncertainty for currency markets already navigating volatile global conditions.
