Business

Dollar Doubts Dominate Gathering of Global Economic Leaders

Published

12 months ago

April 26, 2025

Dollar Doubts Dominate Gathering of Global Economic Leaders

On the sidelines of the spring meetings of the International Monetary Fund and World Bank this week, Treasury Secretary Scott Bessent tried to convey an important message about the United States dollar.

Speaking to a crowd of global policymakers, regulators and investors, Mr. Bessent sought to allay fears that had ballooned in recent weeks about the dollar’s global standing and the country’s role as the safest haven during times of stress. He reiterated that the administration would continue to have a “strong-dollar policy” and affirmed that it would remain the currency that the rest of the world wanted to hold, even though it had weakened against most major currencies.

For participants at the event, Mr. Bessent’s comments were a needed salve after a bruising couple of weeks in financial markets as a result of President Trump’s trade war. Violent swings in stocks, coinciding with the weakening of the dollar as investors fled U.S. government bonds, had incited panic.

The fact that Mr. Bessent found it necessary to emphasize that message in front of such a big crowd underscored how precarious the situation had become since Mr. Trump returned to the White House less than 100 days ago. What now looms large are uncomfortable questions about what happens if the international community starts to lose faith in the dollar and other U.S. assets, something that economists warn would be costly for Americans.

“People are playing through scenarios that previously had been judged unthinkable, and they’re playing them through in a very serious kind of way in the spirit of contingency planning,” said Nathan Sheets, the chief economist at Citigroup and a Treasury official in the Obama administration.

“If the United States is going to pursue aggressive economic policies, it’s natural for the rest of the world to step back and say, ‘Well, do we want to buy U.S. assets as we have in the past?’”

‘New World Order’

At a similar gathering hosted by the I.M.F. and World Bank six months ago, attendees were preparing for an entirely different economic backdrop. Convening less than two weeks before the presidential election, they still had in their sights a rare soft landing in which the major central banks finished their fight against high inflation while managing to avoid a recession.

The tariffs Mr. Trump had been talking about on the campaign trail were top of mind, but for the most part, they were viewed as a negotiating tactic. Any turn toward protectionism was widely expected to push up the value of the dollar compared with other currencies. The rationale was that tariffs would lower demand for imported goods, since they would make them more expensive for American consumers, and over time result in fewer dollars being exchanged for foreign currencies.

But since Inauguration Day, the opposite has occurred. An index that tracks the dollar against a basket of major trading partners has fallen nearly 10 percent in the last three months. It now hovers near a three-year low. The sharpest slide came after Mr. Trump announced large tariffs on nearly all imports in April. While he temporarily reversed course, the dollar has yet to recoup its losses.

There are reasons not to read too much into its recent weakening. The U.S. economic outlook has fundamentally changed. Businesses are “frozen” by tariffs, Christopher J. Waller, a governor at the Federal Reserve, said this week as he warned about layoffs stemming from the uncertainty.

Economists have sharply scaled back their estimates for growth while raising their estimates for inflation, a combination that carries a whiff of stagflation. In that environment, it is not surprising that the dollar and other U.S. assets appear less appealing.

Dollar depreciation — even if extreme — also does not necessarily translate to a loss of stature in the global financial system. There have been previous big drops in the value of the dollar that have not incited a wholesale shift away from the currency’s primacy, said Jonas Goltermann, the deputy chief markets economist at Capital Economics.

But at this year’s spring meetings, there was a palpable sense that something more ominous could be taking place. Joyce Chang, JPMorgan’s chair of global research, noted a disconnect between domestic and international participants at the conference that the Wall Street bank hosted during the week of the meetings.

U.S.-based investors appeared less concerned about a structural shift away from the country’s assets and more focused on the ways in which Mr. Trump could course-correct on his economic policies. International investors were consumed by the prospects of a “regime change” in the financial system and a “new world order,” Ms. Chang said.

Mr. Trump had recently escalated his attacks on Jerome H. Powell, the Fed chair, fanning fears about how much the administration would encroach on the central bank’s independence. That longstanding separation from the White House is broadly seen as essential to the smooth functioning of the financial system.

“The dollar’s role in the system was not ordained from above,” said Mark Sobel, a former Treasury official who is the U.S. chairman of the Official Monetary and Financial Institutions Forum. “It’s a reflection of the properties of the United States.”

Those include a large economy that transacts with the world; the financial system’s deepest, most liquid capital markets; a credible central bank; and the rule of law.

“I do believe that Trump is doing permanent damage,” Mr. Sobel said.

Few Alternatives

It is hard to overstate the dominance of the dollar globally, meaning there are real limitations to how significantly private and public investors can diversify away from it, even if they want to.

Most trade is invoiced in dollars. It is the leading currency for international borrowing. Central banks also prefer to hold dollar assets more than anything else, and by a wide margin.

“Anybody who’s looking for diversification has to be realistic,” said Isabelle Mateos y Lago, the chief economist at BNP Paribas. “Reserve assets, by definition, have to be liquid.”

Alternatives do exist, but they are hobbled by their own weaknesses. China lacks open, deep and liquid capital markets, and its currency does not float freely, tarnishing its appeal globally. Top European leaders — including Christine Lagarde, the president of the European Central Bank — have talked more readily about bolstering the prominence of the euro, something that is considered more plausible now that countries like Germany are stepping up their spending. But the amount of available euro-denominated safe assets pales in comparison with that of U.S. capital markets.

Still, in the recent period of volatility, investors have found a number of places to take cover. The euro, Swiss franc and Japanese yen have been clear beneficiaries. Gold has rallied sharply, too.

“You don’t need to have the role of the dollar as a reserve asset go to zero,” said Ms. Mateos y Lago. “A multipolar system can totally work.”

Burden or Privilege?

When asked at Wednesday’s event, which was hosted by the Institute for International Finance, whether the dollar’s reserve currency status was a burden or a privilege, Mr. Bessent said: “I actually am not sure that anyone else wants it.”

But economists warn that Americans would be losing clear benefits if the government was too cavalier about the dollar’s shedding its special status.

The country’s exporters would reap rewards, as a weaker dollar would make their products more competitive. However, that advantage could come at the expense of reduced spending power for Americans abroad and higher borrowing costs at a time when the government has huge financing needs.

Despite the pain that Americans may have to bear, the global financial system would be far more “resilient” if other currencies shared the dollar’s global role over time, said Barry Eichengreen, an economist at the University of California, Berkeley. During times of stress, that would mean multiple sources of liquidity.

However, three months into Mr. Trump’s second term, Mr. Eichengreen warned that a “dire scenario is now on the table” — a sharp sell-off of dollar-denominated assets into cash.

“A chaotic rush out of the dollar would be a crisis,” he said. “All of a sudden, the world would not have the international liquidity that 21st-century globalization depends on.”

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Business

The tale of L.A.’s iconic hot sauce and how Ozempic is making it even hotter

Published

6 hours ago

April 12, 2026

Press Room

The tale of L.A.’s iconic hot sauce and how Ozempic is making it even hotter

For 55 years, the family behind Tapatío has refused to even write down the recipe for Los Angeles’ iconic hot sauce, passing its secret formula for success only from lip to ear in closed rooms.

The Saavedra family put the ingredients on paper for the first time earlier this year as they sold the beloved brand to backers who plan to make their salsa picante even bigger beyond California’s borders. It is a weight off the shoulders of Luis Saavedra, the founder’s son and one of the few people who knew the recipe.

“We didn’t want anyone to know what we were using,” he told The Times in an interview at Tapatío’s factory in Vernon. “That always scared my sisters, because what if something happens?”

Demand for hot sauces had taken off for unexpected reasons just as the Saavedras were looking to sell. The millions of people on Ozempic and other powerful weight-loss drugs often have cravings for more flavor. The values of some sauce companies have skyrocketed. Bachan’s, a Japanese barbecue sauce brand, was acquired in February for $400 million.

While the Dallas private investment firm that bought Tapatío, Highlander Partners, wouldn’t share the terms of the deal, the company’s new chairman, Jeff Partridge, said it hopes to capitalize on the growing appetite for more heat to splash on proteins.

“Whether it’s GLP-1 or desire for proteins, Tapatío and hot sauces enhance that experience,” he said. “Consumers are increasingly seeking flavors.”

Red peppers drive Tapatío’s taste, though the company won’t share which exact peppers are used. The thin sauce uses garlic, salt and other spices for a tangy, peppery punch. It has a mild heat that doesn’t linger.

Luis Saavedra, right, former chief executive officer of Tapatío Foods and son of company founder Jose-Luis Saavedra, speaks with Eric Beatty, the current chief executive, at the company’s manufacturing facility on Wednesday.

(Genaro Molina / Los Angeles Times)

The big acquisition is a long way from the brand’s birth in founder Jose-Luis Saavedra’s kitchen more than 50 years ago.

Saavedra, originally from Mexico City, long dreamed of making his way north. He landed in Chicago in his late 20s, working as a Spanish translator. He met his wife and moved to Southern California.

He worked at an aerospace parts manufacturer in Los Angeles. The homemade hot sauce he brought for lunch was a hit with co-workers who asked for more. When he was laid off in the late ’60s during an oil recession, he started selling bottles.

As sales rose, he rented a small space for production in Maywood and it officially became a business in 1971. The whole family pitched in. His son, Luis, remembers twisting on caps and attaching labels to bottles when he was 13.

Bottles are filled with Tapatio hot sauce.

Saavedra and his son would drive a van up and down Los Angeles, manually packing and unloading the product to local corner stores. Many of the first bottles were stocked in East Los Angeles stores.

About five years in, the company made enough for Saavedra to quit the two part-time jobs he had picked up to keep the business afloat. Operations remained in Maywood for 14 years before they expanded to a 7,000-square-foot building in Vernon.

In 1996, the company made its boldest bet, splurging on a 30,000-square-foot building.

In the same facility today, the strong aroma of spices tickles visitors’ noses. The precise portioning of the secret ingredients, matching the ratios of the founder’s original formula, happens in a room locked off from employees. The magic mix is then rapidly poured into a long line of empty bottles that march along a conveyor belt like soldiers.

It’s the legacy of the founder, who refused to be deterred by naysayers or obstacles to growth, said Saavedra’s son.

“Let’s go around it,” the younger Saavedra said, quoting his father’s mantra in the face of problems. “Let’s go under. Let’s go above it.”

His father’s stubbornness paid off in court as the company was sued for its name. It was once called Cuervo — his wife’s original last name — and tequila giant Jose Cuervo came after it. Saavedra had already trademarked the name in California, so it got a big payout to give up the name.

Saavedra briefly entertained the name “Charro,” a reference to Mexican cowboys, before landing on Tapatío, a nickname used for people born in Guadalajara, Jalisco, where all three of his children were born. Its logo evolved into a beaming cowboy with bright blue eyes in a wide-brimmed hat.

The Tapatío name was also challenged. Del Monte Foods sued Saavedra in the ’80s, claiming the name was too similar to its brand “Patio.” Saavedra won that case.

The founding father’s hardheadedness could also sometimes cause trouble.

The original Tapatio label, left, compared to the current lversion at Tapatio.

The younger Saavedra battled with his father in the late ’90s about changing the brand’s label to help it stand out on crowded shelves. The old bottles were largely black and white and looked a little outdated. Eventually, the senior Saavedra gave in. Sales skyrocketed.

Today, Tapatío is shaken over meals around the globe, though its dominance is strongest in California. It has been used in collaborations with other companies to spike mashed potatoes, protein powder, pickles and ramen.

Tacked to a wall at the Vernon factory is an old photo of the dozen people who were there to launch the brand’s new facility 30 years ago. Some of the employees still work there, including Jorge Cuervo, the production supervisor, and Fabian Diaz, who mans the forklift.

Diaz, who moves countless pallets of product, jokes he was born at the factory, having spent almost his entire adult life working for the company.

Under the new ownership, all 25 current employees were retained, and the firm has committed to hiring more.

“They’ve been doing this for a long time,” Luis Saavedra said. “They have a passion for it.”

The family began exploring options for a sale in late 2024, right after the founder, now 97, suffered a stroke.

Jose-Luis Saavedra had remained closely involved in day-to-day operations despite his age, often spending from sun-up to sun-down at the factory.

As he took on all his father used to do as well as his own workload, the younger Saavedra was getting burnt out and started to worry that keeping the company family-owned could be hurting the brand.

“Work was really devouring me,” Luis Saavedra said. “It was a tough decision, very difficult. We cried together as a family, then we said, ‘In the long run, it’s better.’”

Luis Saavedra, left, former CEO of Tapatio.

Once it let potential suitors know the company was in play, the offers poured in. The family considered offers from around 40 companies before choosing Highlander Partners.

In a few years, the company’s new leaders hope to use the growing demand for flavor triggered by weight-loss drugs to bring California’s top sauce to many more markets east of the Rockies, said Eric Beatty, the company’s current chief executive.

“We believe that we’ve got these sector tailwinds behind us,” Beatty said. “It’s going to be a really good story.”

New leadership has grand plans for the brand, hoping to build more facilities and add new products.

“We’ll always be a California company,” Beatty said. “This will always be the center of the Tapatío universe.”

Meanwhile, the Saavedra family still has a minority stake in the company and will continue to help manage it.

“They are the essence of the brand, and really understand the heartbeat of the brand,” said Partridge, Tapatío’s new chairman. “We certainly want to make sure that they always have a voice.”

Business

Video: How the Iran War Is Affecting Inflation

Published

16 hours ago

April 11, 2026

Press Room

Video: How the Iran War Is Affecting Inflation

new video loaded: How the Iran War Is Affecting Inflation

Ben Casselman, our chief economics correspondent, describes how the increase in prices as a result of the war in Iran is beginning to show up in the data, and what could come next.

By Ben Casselman, Nour Idriss, Stephanie Swart and Sutton Raphael

April 11, 2026

Business

Man charged with arson after setting fires inside Ontario Mills mall

Published

18 hours ago

April 11, 2026

Press Room

Man charged with arson after setting fires inside Ontario Mills mall

A man was arrested Friday morning after he set multiple fires inside stores at the Ontario Mills mall, officials said.

Ontario police said they responded to the mall at about 10:30 a.m. after callers reported that a man with a lighter and a backpack was intentionally setting fires.

Officers found the suspect, who they identified as 28-year-old Luis Javier Gallegos Jr. of Rancho Cucamonga.

The police said in a statement that Gallegos did not comply with their requests, and they used force to arrest him.

Both Gallegos and an officer suffered non-life-threatening injuries during the arrest, the police said.

After being treated at a hospital, Gallegos was booked into the West Valley Detention Center and charged with felony arson, the police said.

Police said they are working to identify a motive for the crime and whether there is any connection to the April 7 arson at the Kimberly-Clark warehouse in Ontario.

Prosecutors say the inferno destroyed the 1.2 million square-foot warehouse and the paper products inside, resulting in $500 million in damages.

Chamel Abdulkarim, a Highland resident who worked at the warehouse, is facing both state and federal arson charges for setting the fire.

Abdulkarim, 29, filmed himself setting fire to multiple pallets of paper goods, according to the U.S. attorney’s office for the Central District of California.

In the video, he says, “If you’re not going to pay us enough to [expletive] live or afford to live, at least pay us enough not to do this [expletive].”

Anyone with information about the fires Friday at Ontario Mills Mall is asked to contact the city’s police department at (909) 986-6711.