The Dollar, Tariffs, and Impulse Governance

Apr 22, 2025

Notes

by Dylan Ratigan
Week of April 22, 2025

Over the last week, I’ve been in conversations across Europe—bankers, sovereign fund managers, CEO’s and independent allocators alike—and one theme is coming through louder than any other: the weakness in the U.S. dollar is not just a market event—it’s a political signal.

The U.S. dollar has long held its place as the world’s reserve currency not because of its interest rate or GDP correlations alone, but because of what it has represented: rule of law, institutional stability, and strategic coherence. Those assumptions are no longer safe.

We now find ourselves in an environment where the value of the dollar is eroding, not simply from debt levels or deficits, but from an underlying erosion in confidence in American governance itself.

Markets Still Believe in Bluff Diplomacy

What’s remarkable is that markets are still largely pricing in the idea that this is largely bluster. The Trump administration’s recurring tariff threats—targeted at allies and competitors alike—are still largely being discounted by traders and policy desks as performative or short-lived. The common refrain: “They won’t actually go through with it.”

This belief is doing more to stabilize equity markets than any economic data. But let’s be clear—it’s faith, not fact, that’s doing the heavy lifting here. And faith in American consistency is a far shakier pillar than it was even a decade ago.

Impulse Over Strategy

The deeper issue is one of process. Across global leadership circles, there’s growing concern that the United States is no longer operating with a strategic framework—but rather with a reactive, personality-driven approach to lawmaking, regulation, and international engagement.

It appears, more than ever, that U.S. policy is written based on the impulses of one man, on any given day, without institutional constraint or long-term logic. This isn’t a political critique—it’s a structural one. When a superpower acts impulsively, the world hedges accordingly.

For Investors

Investment signal.

Weakening credibility of U.S. trade commitments and the dollar’s declining role as a trusted instrument of value.
Capital flow into stable European and Asian trade blocs, particularly those reinforcing rules-based systems.
Defense-aligned technologies, sovereign logistics, and digital infrastructure that enable regional self-reliance.