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.
The thing is, that billion dollar is worth a billion dollars of stuff. A weak currency is not the same as inflation. It’s just the value of your currency compared to all the other currencies.
If you are doing manufacturing, then having a weak currency is good. You buy raw materials locally, you take those abroad and sell them, and then you have more US dollars to buy raw materials again.
If you’re importing, though, then the opposite is true. You prefer a strong currency. The USA currently imports more than it exports.
Giving the boffins in the White House the benefit of the doubt, maybe they want to strengthen the manufacturing industry within the USA? They are losing pretty badly to China on that front. (China intentionally keeps its currency weak for this purpose, BTW). It’s pretty clear that the USA wants a war with China, but that’s pretty difficult to supply if you can’t actually make anything locally.