Summary
Trump had to reverse his aggressive tariff rhetoric after CEOs from Walmart, Target, and Home Depot warned of empty shelves and higher prices due to supply chain disruptions.
Investors reacted negatively to his threats against Fed Chair Jerome Powell, prompting a market sell-off.
Trump backtracked, expressing optimism on a China trade deal and now denying plans to fire Powell.
Global markets remain volatile, and the IMF cited Trump’s trade war as a “major negative shock” to global growth.
I don’t think that’s possible. Not to the degree that would rebuild trust in a reserve currency. Once that money starts moving to something else, it’s gone. There would need to be a big incentive to come back, and it’s not clear what that would be.
The change would have to happen before any major moves happen. But then, just the fact that US policy is flip flopping so quickly is itself reason to mistrust it as a reserve currency. How do you know it won’t flip right back?