Explore the complex interplay of tariffs, currency strength, and global trade.
A higher USD Index means the dollar is stronger. Tariffs typically exert upward pressure on a country's currency. Active currency intervention aims to counteract this by weakening the currency.
This reflects the change in the final cost of imported goods for domestic consumers. Tariffs directly increase this cost. However, a stronger domestic currency can partially offset this by making foreign goods cheaper before tariffs are applied.
This indicates how much more (or less) expensive a country's goods become for foreign buyers. A stronger domestic currency makes exports pricier abroad, potentially reducing demand from other countries.
Tariffs are often intended to boost domestic manufacturing by making imports less competitive. However, if tariffs lead to a significantly stronger currency, this can make exports more expensive, potentially harming export-oriented manufacturing. Currency intervention to weaken the currency can help mitigate this negative effect on exports.