Donald Trump’s help for a weaker greenback has the potential to torpedo a key tax-reform proposal that has served as one of many foremost catalysts of the U.S. inventory market rally.
The so-called border-adjustment tax favored by Republicans within the House of Representatives is principally a cost on imports into the U.S. that was presupposed to be partly offset by a stronger dollar. The absence of a stronger greenback to function a counterbalance towards the doubtless ensuing inflationary strain from the tariff appears to make the tax a much less of a risk.
“I wonder if [Donald Trump’s] observation about the strength of the dollar is a backhanded downgrading of the possibility of the border-adjustment tax — at least as proposed in the Paul Ryan plan,” stated Scott Clemons, chief funding strategist at Brown Brothers Harriman in New York. “That plan would theoretically lead to a stronger dollar. So you just think the dollar’s strong now.”
by way of Bloomberg
SOURCE: MarketPulse – Read whole story here.