Trump’s Weak Dollar Policy Could Hurt Stocks

Donald Trump’s support for a weaker dollar has the potential to torpedo a key tax-reform proposal that has served as one of the main catalysts of the U.S. stock market rally.

The so-called border-adjustment tax favored by Republicans in the House of Representatives is basically a charge on imports into the U.S. that was supposed to be partly offset by a stronger greenback. The absence of a stronger dollar to serve as a counterbalance against the likely resulting inflationary pressure from the tariff seems to make the tax a less of a possibility.

“I wonder if [Donald Trump’s] observation about the strength of the dollar is a backhanded downgrading of the possibility of the border-adjustment tax — at least as proposed in the Paul Ryan plan,” said Scott Clemons, chief investment strategist at Brown Brothers Harriman in New York. “That plan would theoretically lead to a stronger dollar. So you just think the dollar’s strong now.”

via Bloomberg

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