Just over a month into Donald Trump's second term in the White House, the global political and economic landscape has already undergone significant changes. Compared to his first term, his impact this time may be even more profound. Trump has started with aggressive tariff policies, imposing additional tariffs on Canada, Mexico, and China. Although China’s tariff increase appears to be the lowest at 10%, Trump announced a one-month delay in implementing the tariffs on Canada and Mexico after speaking with their president and prime minister. However, the tariffs on China were enforced immediately, without any direct communication between the two governments. Following this, Trump proposed a 25% tariff on all steel and aluminum imports and is now setting his sights on copper and semiconductors—showing no regard for whether the affected countries are allies or adversaries.

Some analysts believe that as long as trade partners meet Trump’s demands, negotiations remain possible. His ultimate goal may be to restructure the U.S. tax system by using tariff threats to bring manufacturing back to the U.S., thereby increasing employment and boosting the economy. If this strategy fails, he could use tariff revenue to improve the country's fiscal position, creating room for domestic tax cuts. From a voter’s perspective, such policies are likely to gain support.

Trump’s foreign policy approach has been highly confrontational. He has made inflammatory remarks about Canada, Greenland, the Panama Canal, and even Gaza. His latest move involves direct negotiations with Russia on the Ukraine war, sidelining European allies and pressuring Ukraine’s President Zelensky to make significant concessions—going so far as to label him a dictator. Trump even cast a vote at the United Nations opposing a resolution condemning Russia’s invasion of Ukraine. His ultimate interest appears to be Ukraine’s vast reserves of rare natural resources, but his actions contradict traditional international norms and values, pushing the U.S. further away from Europe. While prioritizing American interests is expected, his aggressive approach risks damaging the U.S.'s global image and accelerating moves toward de-dollarization.

In previous analyses, I noted that from a fundamental and monetary policy perspective, the U.S. dollar still holds an advantage. However, the growing uncertainty surrounding Trump’s policies, coupled with lackluster U.S. economic data, is shifting market sentiment. Consumer confidence and retail sales have weakened, increasing expectations that the Federal Reserve may cut rates again as early as June. The 10-year Treasury yield has already retreated to around 4.3%, down by 50 basis points from its recent high. As a result, the U.S. Dollar Index remains under pressure and may test the 105.40–105.80 range in the near term.

Patrick Law

Chief Operating Officer of Hantec Group