It is becoming clear that President Trump’s actions are driven by both his fixation on reducing the US trade deficit and his transactional approach to dealing with other countries. So, even though the Trump administration’s ideas to transform the entire global trading system are unlikely to be implemented in full, we may see some elements come into effect. But so long as the US steers clear of more extreme proposals amounting to de facto default on US debt, we doubt this would destroy the dollar’s primacy.
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