Deutsche Bank is out with a note today that’s getting attention. It highlights the drop in the US dollar across the board in the aftermath of the US tariff announcements.

They highlight that the calculation of US tariff rates is particularly problematic, something I also wrote about. This is a diplomatic way of saying ‘the clowns are running the circus’:

There is a very large disconnect between communication in recent weeks of an in-depth policy assessment of bilateral trade relationships with different countries versus the reality of the policy outcome. We worry this risks lowering the policy credibility of the administration on a forward-looking basis. The market may question the extent to which a sufficiently structured planning process for major economic decisions is taking place. After all, this is the biggest trade policy shift from the US in a century

They make one other great point in that other countries can’t negotiate with this. The high numbers on countries with virtually no tariffs or barriers leave no room for negotiations. What’s the ask for a country that already has no tariffs or minimal tariffs?

Looking ahead, DB remains bearish on the dollar and is now looking at the growth implications:

We argued that a sharp retaliatory move higher in USD/CNY is the most material risk to a dollar bearish view. Outside of that however, we are squarely focused on the market’s perception of the relative growth and fiscal policy outlook between the US and rest of the world and broader perception of relative policy credibility. Our assessment of the newsflow so far is dollar bearish. The policy reaction from China and Europe in coming weeks will be critical in an ongoing assessment of this view.

This article was written by Adam Button at www.forexlive.com.