The rise of Donald Trump as elected president of EU It has generated a strengthening of the dollar and the actions of the world power, but this should not have a myopic vision about the effects that the implementation of the “America First” program promoted by the magnate could have.
According to the manager New York Life Investments, lhe “America First” policies and strong US growth. “will likely keep both stocks and the dollar supported in the short term, complicating the case for international investments in relative terms”.
However, the ETF manager clarifies that there is still a “structural case for international exposure,” including the possibility of geographic diversification in the face of geopolitical events.
“Although markets outside the US have lagged in terms of growth, they are ahead of the rate cut cycle. From here, rate cuts and declining inflation abroad could support a recovery,” says the market report published this Monday.
In this sense, New York Life recommends “maintaining a full or partial currency hedge on exposure outside the US.”
The international implication
An “America First” stance, especially with tariffs, could weaken demand for foreign currencies, strengthening the dollar against exporting countries such as China and Mexico. Although tariffs boost the dollar, they also present risks, such as the possibility of trade retaliation by partners, says New York Life Investments.
China, for example, controls key raw materials, including particular metals, and could limit supply to U.S. semiconductor manufacturers.
In the case of Mexico, the Latin American country could respond if it becomes a target, with the peso and US stocks linked to Mexico already under pressure.
On the European side, right-wing governments are likely to support similar trade restrictions, amplifying volatility.
Economic outlook
On the other hand, UBS updated the US economic outlook with three particular points.
First, the Fed will continue to cut rates, “but may proceed more cautiously and maintain some relativity along the way,” the Swiss bank says.
On the other hand, according to UBS, the US economy “will continue to grow around the short-term trend.”
Third and finally, the Republican “sweep” raised the prospects for fiscal expansion, which increases expectations for growth and inflation.
In this sense, UBS continues “to believe that the direction of interest rates is lower, since it is likely that any policy change may take time to be implemented, the labor market continues to relax and the terminal rate has already been revalued upwards” .
UBS summarizes its analysis with the view that the 10-year US Treasury yield will trend towards 4% in June 2025.
What are the potential impacts of President Trump’s “America First” policies on international investment dynamics, particularly in emerging markets?
As a website editor for world-today-news.com, I would love to hear your thoughts on the potential economic implications of President Donald Trump’s “America First” policies and the 2020 US election results. Could you please share your insights into how the rise of President Trump has impacted the global economy, particularly from an international investment perspective? Additionally, what are your predictions for the future of the US economy under a second Trump term or a new administration?
From the article, it’s clear that there are concerns about the potential effects of trade tensions and currency fluctuations on international markets. How do you believe these factors could impact emerging markets and developing countries, and what strategies would you recommend for investors looking to diversify their portfolios?
Furthermore, how do you see the US dollar performing in the near future in light of these geopolitical tensions, and what role do you envision China and Mexico playing in this dynamic? Lastly, what are some key metrics or indicators you are watching closely as you evaluate the US economy’s growth prospects and interest rate outlook?
Thank you for your time and expertise.
