Friday 6th June 2025

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Should we be worried about the long-term effects of the Trump presidency? The OECD this week downgraded global growth forecasts because of the uncertainty brought about by his tariff regime. It’s also seeing investors diluting their exposure to US assets. But is this Sell-America trade offset by the TACO trade which assumes Trump will always chicken-out.

This week Phil talks to the FT’s chief economics commentator, Martin Wolf, about the Trump-factor, particularly in relation to the dollar. Key requirements of a reserve currency are safety and stability - have we just lost both of those things? In which case, could another currency take-over, or some sort of basket of currencies, like the IMF SDR? Martin argues the second choice for a reserve currency is a long way behind the US dollar. Also, despite his extraordinary behaviour, financial markets are behaving as though everything is relatively normal. Is the end result that the US President just expedites trends that were happening anyway, driving us to a more fragmented global financial system.

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