A weakening dollar causes concern because it diminishes the purchasing power of U.S. businesses and consumers and can lead to higher inflation.

President Donald Trump on Tuesday said he has no problem with the sharp decline in the dollar that’s been triggered by convulsions in global bond markets and growing skepticism about the U.S.’s reliability as a trading partner.

“I think it’s great,” Trump told reporters in Iowa when asked about the currency’s decline. “Look at the business we’re doing. The dollar’s doing great.”

Trump has long maintained that a weaker currency helps industries that he’s seeking to boost — particularly manufacturers, but also oil and gas. And U.S. corporations that export goods and services abroad typically report stronger earnings when they can convert foreign payments into a weaker greenback.

  • assaultpotato@sh.itjust.works
    13·
    12 hours ago

    I mean, a weaker currency really does boost your export value. That’s why Canadian farmers tend to consider the weaker CAD a benefit - they get paid more CAD per yuan when exporting soy or canola for example.

    The issue is that the US intentionally positioned itself with a strong dollar so they can import stuff cheaper. The deal for American “exorbitant privilege” was essentially “hey America, you can have the world as your shopping mall with a strong currency for cheap imported goods, but in exchange you’ll provide the backing for collective defense with your extra budget, stay stable, and buy our goods”. Trump wants to have his cake and eat it too, maintaining the effective global tax via USD transactions but also have a weaker dollar for American exporters. This is all that hubbub about “reducing trade deficits”… which were created intentionally as part of that deal in the Bretton Woods/post-Bretton Woods Era.

    US consumers like cheap phones, TVs, imported fruits, and travel. The strong dollar is a necessity for this. Much of the US debt is heavily subsidized as a side effect of a strong dollar as part of that exorbitant privilege exchange. They can have their weaker dollar but they’ll lose the benefits from it and I don’t think they’ll accept that easily. Throwing all that away to strengthen your export market is deeply foolish, but the mechanisms at play do work generally as they claim.