Trump’s Tariffs Send Dollar to Worst Start Since 2005

- High-tariff, low-tax policies upend Wall Street forecasts for 2025. - U.S. dollar weakness, stock market volatility, and a stronger yen reshape global financial dynamics. In the first half of 2025, aggressive tariffs and tax policies from the Trump administration sent shockwaves through global markets, shattering Wall Street’s forecasts for a stronger dollar and stable equities. The combination of high tariffs and unexpected market responses forced investors to reevaluate global financial strategies during the year’s initial months. On January 1, 2025, major U.S. financial institutions—including Morgan Stanley, Societe Generale, and JPMorgan—entered the year projecting a strong U.S. dollar. However, according to a Bloomberg report from early 2025, the currency experienced its weakest start since 2005, with a Bloomberg dollar index showing a sharp selloff. Analysts attributed this downturn to fears that Trump’s policies aimed to deliberately devalue the dollar to support domestic industries. Consequently, this move raised concerns about deterring the foreign investment needed to fund U.S. debt and blindsided financial strategists who had anticipated a strong dollar. Meanwhile, the stock market experienced extreme volatility in the year’s initial months. On June 30, 2025, Cryptopolitan reported that early-year optimism for U.S. technology equities had quickly soured. Between February and April, the Nasdaq 100 lost nearly $7 trillion in market capitalization, a loss attributed to the emergence of China-based AI competitor DeepSeek and economic stagnation from Trump’s April “Liberation Day” tariffs. However, the S&P 500 rebounded later in the year after Trump unexpectedly paused tariffs, which led to a stock rally, especially in tech equities. In currency markets, a Bloomberg report from June 2025 noted the Japanese yen’s robust performance against the dollar. By that month, the yen had appreciated nearly 9%, outperforming most other major currencies. Analysts attributed this strength to the Bank of Japan’s planned interest rate hikes, even as other central banks considered rate cuts. In addition, investor demand for safe-haven assets amid U.S. market uncertainty fueled the yen's rise, while the growing risk of a U.S. recession made it an even more appealing and stable option for cautious investors. This volatility extended to cryptocurrency markets. According to CoinMarketCap, as of June 30, 2025, at 12:00 UTC, Ethereum (ETH) traded at $2,185, with a 1.8% increase in 24-hour trading volume, while Bitcoin (BTC) was valued at $35,764, reflecting a 3.1% 24-hour volume change. These rapid shifts highlight the far-reaching impact of Trump’s policies and the need for investors to adapt to a landscape marked by volatility and geopolitical uncertainty.