Investors are moving toward European assets, gold, Swiss francs, and Japanese yen—reducing exposure to dollar-based holdings
Economists and analysts are raising alarms as financial markets show signs of strain due to President Donald Trump’s unpredictable tariff policies. Some warn that the US may be heading toward a “capital war” as the dollar weakens and investor confidence wavers.
According to experts, Trump’s approach of using tariff hikes to pressure countries into trade negotiations could backfire. It risks undermining investor trust and increasing US borrowing costs.
Key warnings
Market Volatility: Stock volatility spiked after Trump’s April 2 tariff threats and remained high even after a partial rollback on April 9.
Bond Dumping: Japanese investors offloaded $17.5 billion in US bonds during the week ending April 4—the largest selloff since the November election. Meanwhile, 30-year Treasury yields had their biggest weekly jump since 1987.
Dollar Weakness: Traditionally a safe haven, the US dollar weakened amid the turmoil. Nearly 30% of America’s $29 trillion in Treasury debt is foreign-owned, magnifying the risk.
Investors are moving toward European assets, gold, Swiss francs and Japanese yen—reducing exposure to dollar-based holdings, which could threaten the dollar’s status as the world’s reserve currency.
While Treasury Secretary Scott Bessent attributes the movement to technical trading, others see deeper systemic concerns.