Trump’s erratic policy is harming the reputation of American assets

Subscribe to enjoy similar stories. PRESIDENT DONALD Trump’s bullying of America’s allies and neighbours may appeal to the maga base. Unfortunately, investors feel otherwise.

Confidence in the prospects for the American economy has been sapped and financial markets are sinking. The S&P 500 index of American stocks has dropped by 9% since its peak in February. Because Mr Trump’s on-again, off-again protectionism defies logic, their faith in his administration’s ability to steer the economy is evaporating.

It is the same with the dollar. As Mr Trump has threatened tariff after tariff, it has fallen, dropping by nearly 6% against a basket of other currencies since mid-January. Most notable is its decline against the euro, spurred by expectations of a surge in European defence spending.

One source of confusion is that Mr Trump’s team say they want different things. Scott Bessent, the treasury secretary, maintains that the administration wants a strong dollar, in line with recent American policy. Both Mr Trump and J.D.

Vance, the vice-president, believe that the strength of the greenback is holding back American industry. Currency traders whisper about a “Mar-a-Lago" Accord, a repeat of the Plaza Accord that in the 1980s prodded America’s main trading partners to co-operate to weaken the strong dollar, and which was first proposed by Stephen Miran, now an adviser to Mr Trump. Another source of confusion is that, just as with Mr Trump’s tariff policy, the administration misunderstands the benefits and costs of having a weak currency.