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 
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.