US tariffs will weaken US dollar If nations strike back, Bank of America says

US President Donald Trump tariff policies will eventually be a drag on the US dollar despite providing an initial boost, according to Bank of America.

“The dollar may not like tariffs after all,” wrote Athanasios Vamvakidis, the bank’s head of G-10 FX strategy, in a Wednesday note. “In a scenario of US tariffs against the rest of the world and full retaliation, the dollar could weaken.”

So far, US tariffs have lifted the world’s reserve currency thanks to its haven appeal as levies risk upending global trade flows and increase inflationary risks in the US. The Bloomberg Dollar Spot Index advanced about 7 percent since its lowest point late September, supported by robust US economic expansion and promises of new tariffs on allies and adversaries.

The gauge jumped more than 1 percent last week immediately after Trump announced 25 percent tariffs on imports from Mexico and Canada, but pared gains when the neighboring US countries struck a deal with Trump to delay those measures.