US$ may weaken for a while due to lack of immediate imposition of tariffs (in contrast with other policies like immigration) and statement that his administration would “ begin the overhaul” of trade with foreign countries.
I don’t expect this to last long as Tariffs will be imposed ultimately for two reasons (in Trump’s economic view):
- 1. Otherwise US trade deficit with grow not shrink as US is growing faster than anywhere else and will suck in more imports while exports stagnate;
- Trump sees tariffs as a source of revenue to fund tax cuts.
However, gradualism will disappoint US$ bulls - which is an almost universal consensus - including me.