How will Donald Trump’s customs duties affect the power of the dollar? Will the United States get back to recession? Here is the Bank of America view

According to Bank of America’s foreign exchange analysts, if US President Donald Trump progresses with comprehensive customs duties, the power of the US dollar may not be sustainable.

In a recent report, Athanasios Vamvakidis and Claudio Piron said that the targeted customs duties for certain products are already expected by the market, but more comprehensive trade restrictions would be a “negative surprise”. They warn that new customs duties can lead to more uncertainty, especially when concerns about a possible economic slowdown in the USA.

“We believe that the risks are balanced before the next week’s deadline. It is already expected to bring customs duties to certain products. Comprehensive tariffs will be a negative surprise. When comprehensive tariffs are realized, the dollar is not expected to continue to strengthen and the market is still concerned about the slowdown of the US economy. They also pointed out that logistics problems could delay the implementation of new customs tariffs and leave spaces for potential negotiations.

Trump’s customs duties strategy, especially in Japan, has led to a widespread concern between economy and business circles. On March 26, Trump signed a declaration that imposed 25 %customs duties on imported cars at the White House and will enter into force on 2 April. This move caused criticism of international trade experts and automobile manufacturers who feared significant disruptions in global supply chains.

Hideo Kumano, Chief Economist of Dai-Ichi Life Research Institute, warned that such protectionist policies are low and that they may pose a risk for a wider global economy. Kumano said, “The US customs duty policy has no positive impact and it will bring risks to the global economy,” Kumano said.

*It is not an investment advice.