Trump and a weaker U.S. dollar: A love story

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A new courtship at the highest levels of finance is worth paying attention to this year. A weaker U.S. dollar is wooing President Donald Trump, and he could very well fall in love with it.

“I think it’s great,” he said after an Iowa economic speech last week. “The value of the dollar — look at the business we’re doing.”

It’s certainly good news for U.S. exporters, who find it easier to sell their products to foreign customers who have more purchasing power. Tech behemoths like Apple $AAPL, which generate most of their revenue abroad and later convert it to dollars, are also surely warm to the trend. 

But not everyone is cheering the dollar’s latest slump.

Investors aren’t reflexively reaching for the dollar as armor against recent global market shocks, whether it’s Trump demanding Greenland or pointing a cannon — economic or military — at friendly governments in Europe. The dollar has shed more than 10% of its value since Trump re-entered the Oval Office, according to the U.S. Dollar Index, which tracks the performance of the dollar against a basket of currencies.

“Certainly confidence has been eroded a little bit,” Adam Turnquist, chief technical strategist for LPL Financial, told Quartz Washington. He listed tariff threats, ongoing volleys against the Federal Reserve, and the growing federal debt as all combining to spook investors away from the dollar and diminish its usual reputation as a safe asset.

“All of that has left foreign investors wondering, ‘how much dollar do I really want to have exposure to?’” Turnquist said.

Joseph Brusuelas, chief economist of accounting firm RSM, said the dollar has more room to fall this year. “It's not going to be anywhere near the 10% decline we observed in 2025, but modest single-digit declines look about right,” Brusuelas said.

The dollar’s diminished luster arrived in tandem with an astonishing surge for gold that kicked off at the start of last year. Since January 2025, gold doubled in value and at one point reached a record of $5,500 per ounce. 

Gold prices have see-sawed in enormous swings more reminiscent of Bitcoin over the past week, a sign the asset isn’t entirely immune from trading shocks. 

‘A weak dollar policy’

In November, the Federal Reserve Bank of St. Louis said the weakening dollar was “consistent with the current federal administration’s stated preferences.” On that front, there have been mixed signals. 

Treasury Secretary Scott Bessent has maintained that the White House isn’t interested in devaluing the dollar. “The U.S. always has a strong dollar policy,” Bessent said in a CNBC interview last week. “But a strong dollar policy means setting the right fundamentals.”

The financial and political worlds devoted much attention to a 41-page blueprint authored in late 2024 by Stephen Miran, a Trump economic adviser now serving in a temporary capacity as a Federal Reserve governor. He argued that a strong dollar made U.S. exports too expensive for foreign customers, and that Trump could attempt to compel other countries to strengthen the value of their currencies.

A lever to force that change? Tariffs and trade wars.

The White House has distanced itself from that document. Still, it’s difficult to set aside Trump’s interest in a weaker dollar. He spoke in favor of it early in his first term.

“The [administration] has adopted a weak dollar policy even if they state otherwise,” Brusuelas said. “A weaker dollar is collateral damage caused by policy unpredictability.”

Indeed, a feebler dollar does help Trump achieve his longstanding goal of eliminating the trade deficit, which he views as evidence that the U.S. is getting ripped off. The trade deficit has shrunk, but many economists maintain such a gap isn’t a sign of economic weakness.

The U.S. dollar is no stranger to competitors in global markets. The Chinese renminbi has long been viewed as a rival to U.S. dominance. Others like the Euro as well. Still, they’re not in the same league. The dollar is still the most traded currency on global foreign exchange markets, enjoying a hegemonic position. Don’t expect the dollar to be knocked off its perch as the global reserve currency anytime soon.

Instead, Brusuelas and Turnquist both believe there will be a gradual shift away among financiers from dollar-based assets that will take place over many years.

Brusuelas compared the dollar’s fortunes to a memorable piece of dialogue from Ernest Hemingway’s The Sun Also Rises.  Asked how he went bankrupt, protagonist Mike Campbell responds: “Gradually, and then suddenly.”

Shortly after Trump unveiled and then postponed the “Liberation Day” tariffs last April, JPMorgan $JPM analysts predicted a “reset” for the dollar. It’s accurate to say we’re at the end of a chapter and the start of another.

“These things tend to move in cycles. I think we've just moved into a period where the U.S. is pulling back from its primary role in facilitating goods around the global economy,” Brusuelas said. “It’s looking more inward. It's seeking to rebalance the global trade system so that it accents its interest. The price of that is likely to be a weaker dollar.”