Trump's statement threatening to take massive retaliatory action if Europe sells dollar-denominated assets, such as US government bonds, has once again shaken global market uncertainty. Just three minutes after his statement was made, a wave of concern spread among investors and market participants.
This threat is not just rhetoric. Massive sales of dollar assets by allies such as Europe could weaken the position of the US dollar, trigger extraordinary volatility in global financial markets, and potentially increase the cost of US government borrowing. Trump is clearly sending a message: US economic interests must not be disrupted, even by traditional allies.