Copper, Chips, and 14 Quiet Trade Threats

July 09, 2025

While most of America was tuned out for the July holiday weekend, 14 foreign capitals received letters that could reshape global trade—and the dollar’s role in it.

The letters came from Trump. The message: prepare for tariffs.

Copper. Semiconductors. Pharmaceuticals.

A fresh list of essential imports is on the chopping block—targeted not for national security, but for negotiation.

This wasn’t bluster. It was precision warfare disguised as bureaucracy.

And while the headlines skimmed past it, markets didn’t miss a beat.

Why This Matters for the Dollar

These 14 letters aren’t about tariffs. They’re about currency leverage.

Tariffs pressure foreign economies to weaken their currencies to stay competitive. In return, they often dump U.S. assets, or worse, bypass the dollar altogether.

So far this year:

  • The U.S. dollar index (DXY) is down nearly 11%—the worst first-half performance since 1973.

  • Central banks from Brazil to India are accelerating efforts to settle more trades in local currencies.

  • FX volatility is climbing—not in a panic spike, but in a quiet unwind.

This is how dollar dominance fades—not in a single announcement, but in 14 envelope-sized escalations.

What Happens Next?

  • If the tariffs hit: Expect retaliation from Asia, and more FX de-risking from emerging markets. Gold and commodities spike again.

  • If the letters were bluff: The damage may still be done. The uncertainty alone forces trade partners to seek dollar alternatives.

  • If Powell caves to political pressure: Expect a weaker Fed, and a weaker dollar by design.

What to Watch

  1. Copper prices — already rising, and a key bellwether for industrial trade friction

  2. Asia FX markets — particularly the Korean won, Japanese yen, and Australian dollar

  3. Emerging-market bond flows — a rush to dump dollar exposure may follow

Trump didn’t launch a currency war.

He just restarted one—with better aim.

The only question is whether the dollar can still afford to fight.

— Death of the Dollar

P.S. If you’d like a broader news-focused take on the tariff wars, check out Afternoon Finance.