US Treasury Sec. Bessent: US still has a strong Dollar policy

Lallalit Srijandorn FXStreet

US Treasury Secretary Scott Bessent said over the weekend that the US Dollar (USD) drop this year is normal variance, adding that the United States still has a strong Dollar policy.

Key quotes

The US still has a strong dollar policy.
Currencies move up and down.
More fiscal spending in Europe tells you that the euro should appreciate.
I don't think anyone is necessarily talking about a shadow Fed.
One spot on the Fed will open up early in the year when Kugler leaves.
A group of trade deals (10-12) will be wrapped up by then.
Approximately 20 other nations will either see reciprocal rates kick in or will see a 10% baseline if they're negotiating in good faith.
It's all up to Trump.
My inclination is that USTR will start a 301 investigation into Canada's digital services tax.

Market reaction

At the time of writing, the US dollar Index (DXY) is trading 0.03% lower on the day to trade at 97.22.

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Tariffs are customs duties levied on certain merchandise imports or a category of products. Tariffs are designed to help local producers and manufacturers be more competitive in the market by providing a price advantage over similar goods that can be imported. Tariffs are widely used as tools of protectionism, along with trade barriers and import quotas.

What is the difference between taxes and tariffs?

Although tariffs and taxes both generate government revenue to fund public goods and services, they have several distinctions. Tariffs are prepaid at the port of entry, while taxes are paid at the time of purchase. Taxes are imposed on individual taxpayers and businesses, while tariffs are paid by importers.

Are tariffs good or bad?

There are two schools of thought among economists regarding the usage of tariffs. While some argue that tariffs are necessary to protect domestic industries and address trade imbalances, others see them as a harmful tool that could potentially drive prices higher over the long term and lead to a damaging trade war by encouraging tit-for-tat tariffs.

What is US President Donald Trump’s tariff plan?

During the run-up to the presidential election in November 2024, Donald Trump made it clear that he intends to use tariffs to support the US economy and American producers. In 2024, Mexico, China and Canada accounted for 42% of total US imports. In this period, Mexico stood out as the top exporter with $466.6 billion, according to the US Census Bureau. Hence, Trump wants to focus on these three nations when imposing tariffs. He also plans to use the revenue generated through tariffs to lower personal income taxes.

Author

Lallalit Srijandorn

FXStreet

Lallalit Srijandorn is a Parisian at heart. She has lived in France since 2019 and now becomes a digital entrepreneur based in Paris and Bangkok.

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