Dollar Tumbles After Trump Calls Currency "Too Strong", Slams Border-Adjustment Tax

Tyler Durden's picture

One can probably put the time of death of the Trumpflation rally as 11:47pm on Monday night. That's when the WSJ published the latest excerpt of its Friday interview with Donald Trump, in which the president-elect himself said the dollar was already “too strong”and blamed this is in part due to China holding down its currency and added that “our companies can’t compete with them now because our currency is too strong. And it’s killing us.”

The yuan is “dropping like a rock,” Mr. Trump said, dismissing recent Chinese actions to support it as done simply “because they don’t want us to get angry.”

As the WSJ added, Trump broke with a recent tradition of presidents refraining from comments on the dollar’s level, and more to the market's surprise, he is now talking the dollar down, not up. The USD is up 4% against a broad basket of currencies since he was elected, and roughly 25% since mid-2014. The dollar-negative sentiment was echoed several hours later by Trump advisor Anthony Scaramucci, who told a Davos audience that "we must be careful of a rising dollar."

In short: the dollar's rise may be over for the time being.

Trump didn't only lash out at the greenback, and in the same interview, which was originally conducted on Friday but whose details were only released on monday, he slammed the Border Adjustment Tax (BAT), the "cornerstone of House Republicans’ corporate-tax plan, which they had pitched as an alternative to his proposed import tariffs" and which some have speculated could catalyze as much as a 15% move higher in the USD.

"Anytime I hear border adjustment, I don't love it", Trump told the WSJ, calling the Border Tax Adjustment "too complicated. "

The border adjustment measure is part of U.S. House of Representatives Speaker Paul Ryan's "Better Way" tax reform blueprint, which was discussed with top members of the transition team during a meeting on Capitol Hill on Monday.  The measure intends to boost U.S. manufacturing by taxing imports while exempting U.S. business export revenues from corporate taxation. Though some tax experts believe Trump has given his support for the border adjustment provision, he termed the measure as getting "adjusted into a bad deal" in the interview.

As warned here previously, retailers and oil refiners have likewise criticized the measure, warning it would drive up their tax bills and force them to raise prices because they rely so heavily on imported goods. But the biggest factor against the BAT may be that Koch Industries, a conglomerate run by billionaire brothers active in Republican politics, last month said the border-adjustment measure could have “devastating” long-term consequences for the economy and the American consumer.

The WSJ provided the first indication of Trump's position on the BAT, which previously was assumed to be supported by Trump. That is no longer the case:

The apparent divide between the incoming president and congressional allies underscores the challenge Mr. Trump will face advancing his agenda, and in particular his planned tax cuts. The transition team and House leaders have been talking but they clearly have some details and agreements to work out.

 

“Speaker Ryan is in frequent communication with the president-elect and his team about reforming our tax code to save American jobs and keep the promises we’ve made,” said AshLee Strong, a spokeswoman for House Speaker Paul Ryan (R., Wis.) “Changing the way we tax imports and exports is a big part of that, and we’re very confident we’ll get it done.”

As the WSJ adds, on the campaign trail last year, Mr. Trump proposed lowering the corporate tax rate to 15% and in the interview with the Journal on Friday, he seemed to suggest that rate cuts were his preferred mechanism for improving the corporate tax system.

“Under the border adjustment concept, if somebody is making a motorcycle or a plane in our country, they’re getting a credit for the plane they make before they send it over to wherever it’s going,” Mr. Trump said. “And you don’t need that plus lower taxes and everything else. And it’s too complicated. They get credit on some parts and not other parts. Where was the part made? I don’t want that. I just want it nice and simple.”

Should Republicans jettison the border adjustment following Trump's criticism, they will need some other way to prevent companies from booking their income outside the U.S., said Warren Payne, a former GOP policy aide at the Ways and Means Committee. Furthermore, unless the US finds a way to effectively tax imports, suddenly Trump's stimulus plan looks quite expensive, putting it in jeopardy.

The result: a broad drop in the USD across all currencies overnight.

Unless Trump issued a "clarification tweet" on his position on the BAT, this may have been the official end of the Trumpflation rally.

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Arnold's picture

Obviously,

they'll have to pass it so we can see what's in it.

Arnold's picture

So... My new hip from China

will be more expensive because

it is already paid for and depreciated as inventory before installation?

Will I get the second free or at low cost because of volume buying?

bwh1214's picture

Of course everyone needs a weaker currency till they don't. Ask Venezuela. This video series is the Econ 101 we all SHOULD have received in high school.

http://www.themonetaryreset.com/search/label/How%20We%20Got%20Here?m=1

VinceFostersGhost's picture

 

 

Push this down......move that over there.

 

OK......we're good.

 

Next?

new game's picture

is trump learning from the fed? talk that fucker down...

cueing trump;xi is the master manipulator, then the fed.

Chris Dakota's picture
Chris Dakota (not verified) new game Jan 17, 2017 9:40 AM

In other news, new laws.

North Dakota will Allow Protesters to Be Run Over if they Block Highways and Outlaw Masked Protests

http://dailywesterner.com/news/2017-01-17/after-pipeline-protests-north-...

they have been run over, everywhere.

https://www.youtube.com/watch?v=6GfL0fb8ERo

 

Whoa Dammit's picture

The only way to have a strong economy is though policies that foster lots of highly paid skilled workers. The past 50 years governmental policies have gone the other way, actively backing and increasing the numbers of the worst paid and dumbest in a race to the bottom for most of us, and a race to the top by the .00001%.

BaBaBouy's picture

Right On ...
Devalue Fiats ...

Protect Yourself... Buy Phys GOLD ...

wren's picture

Dumb ass politicians trying to tell a businessman what is best for business... Trump, just tell us who to throw out of office and we'll get on it! Sick of lawyers telling businesses how to operate. And that's what these ass holes are, they're all lawyers! They couldn't make an honest buck if their lives depended on it!

SubjectivObject's picture

So, the WSJ sat on the revelation since Friday.

Anyone notice any suspicious trades Sun-Mon?

Dollar shorting, somewhere?

Arnold's picture

Nobody is stopping you from jumping on the tweet stream.

I'll let others caution you about Governance Monitoring.

ZeroSense's picture

WOW. can Trump even put two consecutive sentences together? Can someone please show me.

 

I think Trump and his supporters fit together perfectly

VinceFostersGhost's picture

 

Get lost on your way to Huffpo?

Dalcan5's picture

Bingo, you win the jackpot.....you just figured out why Trump won....moron candidate attracts moron supporters lol.

unrulian's picture

Yes... because there were no morons supporting Cankles

Memedada's picture

I’ve been away from ZH for a while. This site has become irrelevant (used to be insights into the shenanigans of the FIRE-sector but is today pure controlled opposition).

Your comment illustrates why ZH (and the plebs – now almost exclusively US-based/indoctrinated – using the site) have become a part of the problem and not the solution. You think the dichotomies offered by your owners represent real alternatives – that they represent “different roads/destinies” and not just two sides of the same (fiat) coin.

The morons in USA votes for ANY OF THE CANDIDATES IN THE RIGGED US “DEMOCRACY”. And yes, the morons voting/supporting Trumps are not any better than the morons who voted Hillary. It is just that this site is predominantly populated by the former type of moron.

The Management's picture

YES YOUR RIGHT ? EXCEPT THE WHOLE FUKCING MEDIA HAS GONE BATSHIT CRAZY ATTACKING TRUMP YOU FUCKING MORON!

If you dont understand that Trump represents a VASTLY different path for this planet - then you:

DO

NOT

BELONG

HERE

.

Memedada's picture

I don’t understand. Enlighten me? How will this fiat-billionaire (=spawn of the system) and his team of former/current MIC-ghouls and Goldman Sachs banksters changes anything to the better?

Name me one central radical policy (radical as understood as game-changing) Trump plans to implement?

PS. I know I don’t belong here – I just visit once in a while because I’m curious into the workings of a controlled opposition of a dying empire. The “quality” of your reply just strengthens that knowledge of “not belonging on this site”.

 

divingengineer's picture

ZH is currently in the grip of a populist political movement.
Lines are being drawn for a battle of our National identity.
And you gonna come on here with that wore out old apathetic non-voter shit?

Memedada's picture

Populist, yes. But Obama’s “hope ‘n change”-movement was also populist (and served the same purpose for the deep state as Trumps MAGA-campaign). Lots of talk but business as usual – Trump will be the same.

The team Trump has put together is a “deep state”-dream team.

 Plus, populism in a dumbed down/deeply indoctrinated population as the US is not necessary a good thing.

JRobby's picture

Was it like being among the first group who discovers a new band before they got big?

The question there is did you immidiately know that it was great and would get big, or did a "friend" tell you?

(We could go on for a while on the definition of "friend")

Mustafa Kemal's picture

Yes, the ususal red herring.  No, all the people supporting the Hildebeast were intelligent and moral.  Yeah, the deplorables get it.

The Management's picture

Yeah been noticing the low paid trolls targeting ZH lately. Youre nothing, your scum. Away with you zombie.

LyLo's picture

It'd be nice if they could at least come up with something worthwhile to discuss.  As it is, it's all just invective and hearsay, none of which bears any relevance to anything mentioned.

(I'm curious; how is it that I've supposedly been here less time, yet have managed to see political waves hit ZH whereas apparently a lot of the "old" readers are flabbergasted by it every time?  When there is a large election--here or abroad--the reporting tone changes and articles get a lot more political for a while.   It happened with Brexit, Greece, seems I recall the midterms in 2014 getting kind of annoying, etc.  If you want exclusively market news, there is a whole list entitled "ZH Reads" just to the left, full of many sites that fit your exact specifications.  In the meantime, write the Tylers and bitch; it's getting old on the boards.)

JRobby's picture

There are a lot now that Oblivio signed the "defense act" over Christmas. There is budget for mass retaliations now.

It will become unbearable shortly. So many valuable links that are posted get pushed way back.

A "dilution" effort. It works sadly.

SimmerDown's picture

Well thank goodness you're here to save us. Who could possibly want to tamper with the Obama legacy? Inconceivable. 

JRobby's picture

Obama has blown both of his feet off in the middle of the woods far from help. He just doesn't know it yet.

His "legacy" will stay positive as long as the MSM as currently operating stays in business. They may "abandon" current business models.  It may be too late by then.

TemporarySecurity's picture

Our currency is too strong, so Trump wants us to be more like China?

Trump supporters should really thing about this rather jump on the populist band wagon. All it means is we can buy more with our money.  Weakening the dollar will mean everything we import, food, trinkets, etc and local products also will cost more.  Just another tax on all American citizens.

 

Sure lets be more like China were food takes 20% of their earned income.

fbazzrea's picture

a strong dollar is just like your moniker--temporary security.

if one doesn't understand global economics, they should not share their uninformed opinions publicly.

just sayin...

Chris Dakota's picture
Chris Dakota (not verified) ZeroSense Jan 17, 2017 9:37 AM

But your guy read the hell outta a teleprompter for 8 yrs.

ahahaah

Scuba Steve's picture

You can put your monkey talk headphones away now, english is now the law of the land AGAIN.

See if you understand this ... FUKK OFF.

shovelhead's picture

If it's like the one they showed about VD, I don't want to see it.

I had nightmares for a week after that one.

Chris Dakota's picture
Chris Dakota (not verified) xythras Jan 17, 2017 9:15 AM

Trump can NOT get out of that limo and walk. He must be behind bullet proof glass when he speaks and then go inside!

Told ya he is gonna be the bunker President, he has to.

shovelhead's picture

Bullets will bounce off of Trump.

Hell, they may even fall to the ground in fear before they reach him.

Even Chuck Norris sweats when he sees Trump.

NoPension's picture

If yer takin flak, yer over the target.

LyLo's picture

If I were he, I'd be far more concerned eating dinner in the WH than walking through a trailer park in TN completely unguarded. 

I'm actually being completely serious, for once. 

fbazzrea's picture

i believe you can rest assured DJT has that angle covered well.

Chupacabra-322's picture

@ xyt,

From the article:

In a little noticed news article, the Associated Press reported days ago that a large cache of weapons, including guns and ammunition, were found along the Potomac River.

The short report claims that a walker came across two guns hidden in a violin case before calling the police who eventually found “several” other weapons.

“U.S. Park Police said a woman walking in the woods near the C&O Canal, which runs along the river, found the case. When law enforcement officers arrived, they found more guns and ammunition — some in pails, others in plastic garbage bags.”

DingleBarryObummer's picture

Would a tariff (as Trump proposes) be better?  What is the big difference?

SimplePrinciple's picture

A tariff can make a better stick in negotiating country-by-country deals.

Offthebeach's picture

Speak to your medical cost tax consultant, or a India call center. Ask for Babu. Then check with your Obamacare Navigator, Ta'Nesha. ( 9:30-10:15, and 1:45-2:50, Tuesday-Thursday)

Déjà view's picture

Give rating agencies a free hand in rating $20T 'Feral Gov' debt...problem should solve itself...

opport.knocks's picture

Rating agencies = Triple ZZZ

shovelhead's picture

Lobbyists on K street.

Rating Agencies on Shakedown Street.

https://www.youtube.com/watch?v=8lCMUkqpI7o