Trump's Tariff Policy and the Tumbling U.S. Dollar

The U.S. dollar faced a decline against major currencies on Monday, with market attention focused on President Donald Trump's escalating tariff plans and their potential growth and inflation ramifications. The greenback faltered following Trump's announcement to substantially increase duties on imported steel and aluminum from Wednesday, while China denied accusations of breaching a minerals agreement.

Beijing labeled the accusations 'groundless' and vowed to take forceful action to protect its interests. U.S. Treasury Secretary Scott Bessent revealed that Trump and Chinese President Xi Jinping are likely to hold discussions soon to resolve the friction. The dollar's decline included a 0.8% fall to 142.85 yen, reversing part of last week's rally.

Concerns over U.S. protectionist trade measures bolstering risk of stagflation, and a potential recession, continue to weigh on the dollar. Analysts highlight the implications of Trump's tariff maneuvers on fiscal stability, given ongoing debates over his tax cut and spending bill proposals, posing further challenges for the U.S. currency.

(With inputs from agencies.)