3/17/2025–|Last update: 3/18/202504:59 AM (Mecca time)
In recent months, global markets have witnessed a remarkable decline in the value of the US dollar, which raised questions about the driving factors of this decline and its impact on the American economy and the commercial policy of President Donald Trump. This decline comes in light of the escalation of customs tariffs, which contradicts traditional economic expectations regarding the relationship between definitions and the strength of the national currency.
A continuous decline in the dollar
According to the Bloomberg Index for the dollar, the value of the American currency has decreased for the third month in a row, indicating market concerns about the consequences of US customs policies on economic growth.
Bloomberg’s data shows that the dollar recorded a decline of 1.7% during the past month, while it decreased against the Swedish Crumeon by more than 5%.
In a related context, the European Unified Currency (the euro) witnessed an increase to the level of $ 1.0905, heading towards its highest levels in 5 months at 1.0947 dollars. The Japanese yen also rose to 148.48 for the dollar after last week reached 146.5, its highest level in 5 months. As for the British pound, it rose 0.26% to $ 1.2971.
Customs definitions and their impact
Economic analysts believe that the weakness of the dollar is inconsistent with expectations that assume its rise when imposing customs definitions, as it is supposed to increase the definitions to strengthen the national currency as a result of the high prices of imported goods. However, financial markets reflect investor fears that these definitions may harm US economic growth more than they benefit.
In this regard, the US Treasury Secretary, Scott Besent, indicated that the decline in the dollar is just a “natural amendment”, stressing that other countries with weak currencies will bear the largest economic burden as a result of the American definitions. “China manufacturers will bear the cost of definitions. I think the currency will adapt to this situation.”
American consumer
As the Trump administration continues to apply strict customs tariffs, such as imposing 25% fees on Chinese imports and raising them to 50% on some commodities, fears about the impact of these policies on the American consumer.
While the US administration sees that foreign companies will bear the cost of definitions, economic studies indicate that imported American companies are actually paying these fees, which ultimately leads to high prices for consumers. A poll conducted by Bloomberg showed that the confidence of American consumers has fallen to its lowest levels in two and a half years, which reflects an increasing concern about the country’s economic future.
International currency response
On the other hand, the Chinese yuan is witnessing a remarkable increase, as it recorded 7,2332 for the dollar, to reach its highest level in 4 months. The monetary policies in China, including the announcement of a “special action plan” to enhance local consumption, are one of the factors that support the stability of the Chinese currency in the face of American definitions.
In Europe, financial markets have witnessed positive developments, as Germany announced a package of financial reforms worth 500 billion euros (545 billion dollars) to enhance defense spending and infrastructure, which contributed to the euro rise against the dollar.
Anxiety about economic trends
The head of the American Research Department at ING, Baderik Garvi, notes that the sharp decline in the dollar reflects “deep concern about the impact of customs definitions.” In a note sent to the customers on March 11, he indicated that the previous expectations of the dollar increased by 10% when the definitions were imposed, but that the dollar began to retreat against most other currencies.
A crisis of confidence in the American economy
As the US administration is ready to implement the largest round of customs tariffs on April 2, doubts about the effectiveness of these policies in improving the American trade balance are increasing. Despite Trump’s assurances and his economic team that these steps aim to achieve commercial justice, markets and polls reflect wide concerns that the American economy will bear the greatest burden, according to Bloomberg.
While some countries seek to adapt to these variables through new economic policies, the question remains open about the extent of the American economy’s ability to withstand these pressures, and whether the dollar will recover or will continue its decline in facing the increasing challenges.
