━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━
🌐 TRADE WARS & TARIFFS — HOW POLITICS DISTORT CURRENCY VALUE
━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━
💡 THE CORE IDEA
Currencies don’t move only because of economics.
They also move because of policy conflict.
When countries impose tariffs or enter trade wars, currency valuation becomes a political weapon, not a free-market outcome.
━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━
📊 WHAT ARE TARIFFS AND TRADE WARS?
━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━
Tariffs are taxes on imported goods.
Trade wars occur when countries retaliate with tariffs, quotas, or restrictions.
Effects:
-
Higher import prices
-
Disrupted supply chains
-
Reduced trade volumes
-
Slower global growth
━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━
⚠️ WHY TRADE WARS MOVE CURRENCIES
━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━
1️⃣ Export Pressure
Tariffs reduce export competitiveness → trade balance worsens → currency weakens.
2️⃣ Growth Shock
Lower trade = lower GDP expectations → dovish central banks → weaker currency.
3️⃣ Currency as a Weapon
Countries may allow their currency to weaken to offset tariffs and regain competitiveness.
━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━
📉 REAL-WORLD EXAMPLES
━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━
🇨🇳 China–US Trade War
-
Tariffs imposed on Chinese exports
-
CNY weakened to absorb impact
→ USD/CNY trended higher
🇪🇺 EU–US Tariff Disputes
-
Industrial tariffs
-
Trade uncertainty
→ EUR pressured during escalation phases
🇬🇧 Brexit Trade Friction
-
Trade barriers with EU
-
Export uncertainty
→ GBP structural weakness
━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━
📈 SECOND-ORDER FX EFFECTS
━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━
-
Global risk-off sentiment
-
Commodity demand slowdown
-
Emerging market capital outflows
-
Safe-haven currency strength (USD, CHF, JPY)
Trade wars rarely stay local — they infect the entire FX market.
━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━
⚙️ PRO TIP — WATCH THESE SIGNALS
━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━
-
Tariff announcements and retaliation timelines
-
WTO dispute escalations
-
Export-heavy sector earnings
-
Currency “non-denial” language from officials
-
Sudden FX weakness without domestic data changes
These often signal policy-driven FX moves, not market-driven ones.
━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━
🚀 TAKEAWAY
━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━
Trade wars distort currency value.
They reduce growth, disrupt flows, and force currencies to absorb economic damage.
When trade becomes a battlefield,
exchange rates become shock absorbers.
In forex, tariffs don’t just tax goods —
they tax currencies.
━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━
📢 JOIN MY MQL5 CHANNEL FOR MORE FOREX FUNDAMENTALS AND REAL-WORLD TRADING INSIGHTS:
👉 https://www.mql5.com/en/channels/issam_kassas
