The 'Wolf' Strategy: Phantom Tariffs and the Dollar's Resilience

As trading volumes normalize in 2026, the US Dollar Index (DXY) continues to oscillate near 98.30. A deep dive into the administration's trade policy reveals a pattern that analysts are calling the “Wolf Strategy”—a cycle of aggressive threats followed by partial or non-implementation that, paradoxically, supports the greenback.

The Gap Between Rhetoric and Reality

A retrospective of 2025 shows a divergence between policy announcements and execution. Key threats that failed to materialize include:

Why This Supports the USD

While one might expect unfulfilled promises to weaken credibility, the uncertainty itself acts as a driver for capital flows. This “low oxygen” environment creates a persistent risk premium. Global capital, fearing a sudden erection of trade barriers, gravitates toward US dollar-denominated assets as a defensive maneuver.

By keeping the threat of protectionism alive without triggering the immediate economic fallout of a full trade war, the administration has inadvertently engineered a “Goldilocks” scenario for the currency: strong enough to attract flows, but not so strong (yet) as to crush export competitiveness entirely. Markets remain wary, however, that any concrete move from “threat” to “law” could trigger sharp volatility.