A small tax with high costs

Markets reacted to mixed signals on US-Iran tensions, with President Trump's claims of talks sparking a rally and falling oil prices, followed by Iran's rejection sending stocks lower and oil higher. The US dollar strengthened overall as a safe haven. Jane Foley, head of foreign exchange strategy at Rabobank in London, explained that the dollar's appeal stems from its liquidity, deep integration in global supply chains, and payment systems, positioning it as investors' choice during uncertainty. This protects the US economic outlook relative to regions like Europe. Bond yields rose amid the volatility, with liquidity flowing into short-term money market assets for quick access.

Trump announced plans to meet Chinese President Xi Jinping in May, marking his first trip to China in eight years.

A key focus was a provision in last year's GOP tax and spending bill imposing a 1% tax on cash remittances—money transfers like money orders. Supporters argue it could generate about $10 billion in revenue and discourage illicit finance. Critics call it regressive, likely to drive transfers underground. Nara Sritharan, research analyst at AidData (a lab at William & Mary), noted the tax layers onto existing fees: World Bank data shows average US outbound remittance costs at 5.8%, pushing the total to roughly 6.8%—a 17% effective increase for cash transfers.