Deepak Shenoy Warns of Global Dollar Dump After Donald Trump’s Reciprocal Tariffs
The US President imposed an import duty of 26% on India and 34% on China, calling them "discounted reciprocal tariffs."
US President Donald Trump's action on reciprocal tariffs could lead to reserve banks worldwide dumping the dollar in favour of alternatives, according to Deepak Shenoy, Founder and Chief Executive Officer of Capital Mind.
Trump, on Wednesday, imposed an import duty of 26% on India and 34% on China, calling them "discounted reciprocal tariffs." Trump claimed he was being "kind" to these two Asian countries by charging roughly "half of what they charge us."
Reacting to the development, Shenoy said that there is no need for retaliation against Trump's move, implying that the decision may not go down well with Americans in the long run.
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"26% tariffs on Indian exports to the US. 54% effectively on China. Tariffs on nearly every country. There isn't even a need for retaliation, honestly. Let Americans pay for this for a while and see how it pans out," he wrote in a post on X, formerly Twitter.
He added that reserve banks across the world might consider dumping the US dollar and adopting alternatives such as Euro bonds for reserves. According to him, there is no point in using the USD as a currency when the country is not willing to import anything 'meaningful'.
"I suppose it's not crazy if all central banks dump the US dollar and move to euro bonds or JPY for reserves. No point using USD as currency any longer since they won't import from you meaningfully. Things will change slowly but surely," he wrote.
Deepak Shenoy said that Trump's recent actions will impact markets negatively. However, he also highlighted a silver lining and added, "The big plus is that most of the uncertainty is gone, and the find out part of the Fafo for Americans now actually begins."
Around 60 nations with major trade surpluses against the US will face reciprocal tariffs, set at half the rates they levy on American goods. A baseline 10% tariff on all imports will take effect at 12:01 a.m. local time (9:30 a.m. IST) on April 5, while higher, country-specific tariffs will be enforced from 12:01 a.m. local time (9:30 a.m. IST) on April 9.
