<\/p>\n
War, tariff volatility, and shifting capital flows challenge the global currency order\u2014even as markets prove resilient. <\/p>\n
<\/span><\/p>\n
When Japan\u2019s largest automaker reported 2025 results last May, it said its earnings were hit by $4.6 billion in foreign-exchange losses due to the US dollar\u2019s decline. This month, Toyota has a new concern: the war in Iran that has spread throughout the Persian Gulf. The company sold 325,000 cars to the region in 2025, but the fighting and the closure of shipping lanes through the Strait of Hormuz could further decrease earnings.<\/p>\n
Even more damaging, the company is forecasting a roughly $9.6 billion drag on earnings in 2026 due to President Trump\u2019s on-again, off-again tariffs. \u201cThe impact of US tariffs,\u201d Toyota CFO Kenta Kon said, \u201cis a significant rise from our initial forecasts.\u201d<\/p>\n
\u00a0The global economy entered 2026 already on shaky ground. The Trump administration\u2019s sweeping tariff policies weakened the dollar and heightened trade fears, while a Supreme Court decision on those tariffs added fresh uncertainty, even as inflation was slowly easing. Then, on February 28, US and Israeli forces launched strikes on Iran, oil prices surged, and the dollar bounced higher in a flight to safety.<\/p>\n
The Strait of Hormuz, which carries about 20% of global oil and LNG exports, effectively closed after Iranian threats and tanker attacks, sending oil prices from about $70 to more than $110 a barrel within days. Oil-import-dependent economies such as Japan, South Korea and China were especially vulnerable to the war\u2019s aftershocks.<\/p>\n
Higher oil prices. Uncertainty about tariffs. The dollar boomerang. Corporate finance executives face a new series of challenges: Higher oil prices, etc. However, despite short-term headwinds for business, global analysts remain relatively optimistic about the long-term economic outlook, even with the war\u2019s sudden shadow over markets.<\/p>\n
While energy concerns increased as war clouds gathered over the Persian Gulf, analysts largely believed that the global economy would revert to a pattern similar to the pre-war period: a gradually declining dollar, reduced foreign investment in US assets, and inflation that persistently prevents central banks from lowering interest rates. A key sign of market consensus was that, by mid-March, the forward price of oil for October delivery was $79 per barrel, compared to its temporary $110 spike after the war began. But the uncertainty surrounding the objectives and duration of the attacks on Iran by the US and Israel has kept oil prices bouncing around $100 per barrel.<\/p>\n
Aside from the currency issue, several factors have contributed to relatively positive economic forecasts despite the fighting in the Gulf. The Trump administration maintains, despite its forecast having been extended, that the disruption to energy supplies will be relatively short-lived. \u201cYou\u2019re seeing a little bit of a fear premium in the marketplace, but the world is not short of oil or natural gas,\u201d said Energy Secretary Chris Wright on CNBC in early March. \u201cWorst case is a few weeks, not months.\u201d<\/p>\n