Catenaa, Sunday, April 20, 2025-Investors are retreating from the US dollar and Treasurys as President Donald Trump’s sweeping tariffs stoke fears of economic instability and drive volatility in global markets.
Since Trump’s latest tariff hike — the largest since 1909 — the dollar has lost nearly 10% of its value, hitting a three-year low against the euro.
Typically, tariffs boost a country’s currency, but mixed messaging from the White House has undermined investor confidence and upended normal market patterns.
“The lack of policy clarity is creating a distinct unease,” said David Page of Axa Investment Managers, which oversees $1 trillion in assets.
Long-term US government bonds, usually a haven during uncertainty, also saw a sell-off. The yield on 30-year Treasurys briefly neared 5% last week, up from 4.4% just days earlier — a rare spike in times of crisis.
Though Treasury Secretary Scott Bessent downplayed the shift, analysts warn higher yields could persist, raising costs for mortgages, car loans and federal borrowing. Some fear a repeat of the 2022 UK bond revolt.
Despite the dollar’s decline, its global dominance remains unshaken. Nearly $7 trillion is still held in dollar reserves, and almost half of all cross-border transactions are dollar-based.
Still, with Trump’s trade policy adding uncertainty, investors are looking to other safe havens. Gold, the euro, yen, and Swiss franc are surging, while foreign markets — especially Germany, China and Japan — are drawing increased interest.
