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The US dollar index (DX-Y.NYB) continues to weaken following President-elect Donald Trump's reaffirmation of his proposed tariff policy stance. Wilmington Trust chief investment officer Tony Roth joins Catalysts to analyze how these policies could present significant downside risks to the economy in 2025.
Drawing from Trump's previous term, Roth suggests the proposed tariff policy serves as "dry powder from a negotiation position." He elaborates, "It's pretty clear that what he's trying to do is improve our economic position through the use of the tariffs by opening other markets. Now that doesn't necessarily happen overnight and it could be that we need to endure a little bit of pain with higher taxes effectively, higher tariffs on imports before we get to pry open some of the other markets."
However, Roth emphasizes the importance of considering worst-case scenarios. While full implementation of the tariff policy under a Trump administration "would throw the economy into recession," Roth advises investors to "be patient" and "stay invested" until more policy clarity emerges, noting that positive economic outcomes under Trump are also possible.
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"At some point, we're going to have to see a correction. Whether it's a recessionary correction or a non-recessionary correction, we'll see," he tells Yahoo Finance.
To watch more expert insights and analysis on the latest market action, check out more Catalysts here.
This post was written by Angel Smith