If the past century is any guide, an escalation in tit-for-tat tariffs between the U.S. and China may boost emerging markets.
Trade wars instigated by the U.S. in the past 100 years usually coincided with weakness in the dollar, which often lifted the value of currencies in developing nations. That could prove true again as there's little sign of a resolution between Washington and Beijing, even after an apparent trade between U.S. President Donald Trump and European Commission President Jean-Claude Juncker.
The dollar is likely to weaken as tariffs take hold because any benefits to manufacturers are nullified by the higher prices and drop in consumer demand that levies bring, according to Kunal Ghosh, a San Diego-based portfolio manager at Allianz Global Investors, which oversees about $580 billion. He said that over the long term, the trade jabs could also decrease the dollar's use as a global reserve currency and its value would suffer.
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