The vice president of the private investment bank Brown Brothers Harriman says that America’s trade policies are weakening the US dollar.
In a new interview on CNBC, Elias Haddad explains why the greenback is falling by record levels this year.
[adinserter block="1"]“Clearly the decline in the dollar here reflects the loss of confidence in the US trade, security and perhaps even fiscal policy because you also see a bit of a divergence between the dollar index and the rate differential. I think that reflects this policy uncertainty.”
He says the protectionist trade policies under the Trump administration are primarily behind the ongoing drag on the US currency.
“First of all, higher tariffs. The average effective tariff rate in the US went from 2% early this year to about 18% right now. That’s a downside risk to growth, upside risk to inflation. That’s bearish for the US dollar. “
Haddad says the ongoing trade war threatens to accelerate the declining role of the US dollar as a primary reserve currency. He says the government’s efforts to narrow the trade deficit also appear to be counterproductive.
“The policies aimed at narrowing the trade deficit mean you’ve got less US dollar flowing overseas. There will be less dollars flowing back into US securities – so for all these reasons, we remain bearish on the US dollar.”
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