Trump digs in his heels on tariffs — with major implications for the U.S. dollar

MarketWatch

by Vivien Lou Chen

February 25, 2026

AI-Generated Deep Dive Summary

President Donald Trump’s recent comments on tariffs have sparked significant discussion among market strategists, with potential far-reaching implications for the U.S. dollar. During his State of the Union address, Trump reaffirmed his commitment to using tariffs as a tool to protect American industries and secure favorable trade deals. This stance has raised questions about how it might impact global markets and the value of the U.S. dollar. The U.S. dollar’s strength is closely tied to economic stability and investor confidence. If Trump’s tariff policies lead to increased trade tensions or slower global growth, this could undermine demand for the dollar in international markets. Conversely, if the administration’s strategy proves successful in renegotiating trade deals or reducing trade deficits, it could bolster the dollar’s value. Market participants are particularly focused on how these developments might influence interest rates and inflation expectations. From a financial perspective, the implications of Trump’s tariff strategy extend beyond currency fluctuations. Tariffs can affect import prices, potentially leading to higher consumer costs and inflationary pressures. This could prompt the Federal Reserve to adjust monetary policy, which in turn impacts borrowing costs and investment decisions. For businesses and investors, understanding these dynamics is crucial for navigating market volatility and making informed financial choices. Ultimately, Trump’s decision to dig in his heels on tariffs highlights the interconnectedness of global trade and currency markets. While it remains unclear how this strategy will play out, its potential impact on the U.S. dollar underscores the importance of staying attuned to developments in international trade policy for anyone tracking financial markets.

Verticals

financemarkets

Originally published on MarketWatch on 2/25/2026