Trump Wants a Weaker Dollar—and Risks US Dominance | The Atlantic

The U.S. Dollar’s recent decline has drawn attention, particularly given President Trump’s surprisingly welcoming stance towards a weaker currency. During an appearance last Tuesday at the Machine Shed Restaurant in Urbandale, Iowa, Trump stated the dollar’s declining exchange rate was “great.” This position, while seemingly counterintuitive, echoes sentiments he expressed during his first term, when he tweeted his dissatisfaction with a strong dollar, stating, “As your President, one would think that I would be thrilled with our very strong dollar. I am not!”

The logic behind Trump’s preference stems from the belief that a weaker dollar can boost the U.S. Economy by making American goods more competitive in international markets. The idea is to replicate the strategy of competitors like China and Japan, whose relatively weaker currencies make their exports cheaper. While this theory isn’t without merit – a weaker dollar could provide certain economic benefits – concerns are growing that the president’s unpredictable policies are eroding America’s economic standing abroad.

The dollar index plunged 1.3 percent last Tuesday, meaning the dollar lost 1.3 percent of its value relative to a group of competing currencies, increasing the cost of some foreign goods. However, this doesn’t translate to an immediate 1.3 percent price increase at the grocery store, although costlier imports can offset the president’s affordability agenda. Trump’s long-held view on the dollar’s strength dates back to at least 1987, when he took out full-page advertisements in The New York Times, The Washington Post, and The Boston Globe lamenting the dollar’s strength compared to the Japanese yen.

Achieving a long-term shift in the dollar’s exchange rate is typically difficult for a president to unilaterally control. Factors like interest-rate policy, largely influenced by the Federal Reserve, play a significant role. Trump’s desire to exert greater control over the Fed is, in part, driven by its influence over the dollar’s value. However, his policies themselves could negate any gains from a weaker dollar. His “mercurial policies” and recent actions, such as the proposed tariffs on European countries, are causing concern among trading partners.

Since World War II, the U.S. Dollar has been the world’s dominant currency, used in international lending, transactions, and trade. This dominance, often referred to as America’s “exorbitant privilege,” allows the U.S. To borrow more easily, run large deficits, and impose sanctions effectively. The recent “Liberation Day” tariffs, for example, were an expression of this privilege. However, Trump’s actions are prompting questions about whether the U.S. Deserves to maintain this position.

While some have predicted the end of the dollar’s supremacy, it remains the dominant global currency. The euro, yen, yuan, and even cryptocurrencies like Bitcoin are not currently equipped to replace it. However, Trump’s distrust of global institutions – including NATO and the World Health Organization – and his willingness to challenge existing treaties and alliances are causing international partners to question America’s stability. Even if no clear alternative to the dollar emerges, continued “inner geopolitical chaos” caused by Trump could shrink the dollar’s reach and increase the influence of other currencies.

The core issue isn’t necessarily the weakening of the dollar itself, but the potential loss of trust in America’s reliability. This erosion of confidence could have far-reaching consequences for U.S. Economic leadership and its long-standing global influence.

Recent News & Developments

Here are a few recent news items:

• The White House “border czar,” Tom Homan, announced plans to pull 700 immigration officers from Minneapolis, reducing the federal presence there by approximately 25 percent.
• Fulton County, Georgia, filed a sealed motion requesting the return of 2020 ballots and election materials seized by the FBI, challenging the legality of the search.
• The Supreme Court allowed California to use a new congressional map approved by voters, potentially enabling Democrats to gain up to five House seats in the upcoming midterm elections.

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