Side effects of US tariffs on global market stability cannot be ignored

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By Hu Weijia (Global Times) 09:19, May 06, 2025

Since the US government announced its tariff hikes, the US Dollar Index has been continuously fluctuating and declining, dropping about 10 percent from its peak at the beginning of this year. In an article published on April 16, JP Morgan noted that the dollar has faced widespread downward pressure since the introduction of US tariffs. The Wall Street Journal reported in April that a persistent weakening of the dollar is stoking fears that Washington's erratic trade policy may have damaged the currency's safe-haven status, with consequences for the US economy.

When US stocks and bonds decline together, investors get spooked about broader economic stability. The trend is so unusual it's associated with moments of extraordinary uncertainty, like the pandemic and the 2008 financial crisis, CNN reported last month.

CNN's Fear and Greed Index, a snapshot of emotion in the markets, has been registering "fear" or "extreme fear" for the last month, CNN reported on April 28, suggesting that the impacts of the US tariffs on its own economy could exceed some people's original expectations.

These developments underscore the broad impact of US policies and the interconnectedness of global economies. The rising uncertainty in the financial markets as a result of US tariff policies is harming the American economy.

The financial side effects of US tariff policies cannot be ignored. It becomes increasingly clear that unilateral actions can have unintended consequences that ripple through the global economy, emphasizing the need for a spirit of multilateral and mutually beneficial cooperation to foster a more stable and prosperous global financial landscape.

The author is a reporter with the Global Times.

(Web editor: Tian Yi, Zhong Wenxing)