Is Trump
busting the dollar?
President
Donald Trump has explicitly stated that he believes a weaker dollar is
"great" for the U.S. economy. While he has not "busted" the
dollar in terms of a total collapse, his policies and rhetoric have contributed
to a significant decline in its value throughout 2025 and early 2026.
Current
Status of the Dollar
Performance:
The U.S. dollar index, which tracks its value against a basket of major
currencies, dropped approximately 10% to 13% during Trump's second term (2025
through early 2026).
Four-Year
Low: By early 2026, the dollar hit its weakest level since 2022, plumbing a
four-year low against currencies like the Euro and Japanese Yen.
The
"Debasement Trade": Investors have increasingly bet against the
dollar—a trend referred to as the debasement trade—as they lose confidence in
the U.S. fiscal position.
Why Trump
Favors a Weaker Dollar
Trump and
his advisors, such as Stephen Miran, argue that a depreciated currency is
essential for reindustrializing the United States.
Export
Boost: A weaker dollar makes U.S.-made goods cheaper for foreign buyers,
potentially boosting manufacturing and narrowing the trade deficit.
Tariff
Synergy: Tariffs are used as a tool to pressure other countries into currency
agreements (sometimes called a "Mar-a-Lago Accord") to ensure the
dollar does not remain overvalued.
Risks and
Counter-Movements
Inflationary
Pressure: A weaker dollar makes imports more expensive, which can drive up
inflation and borrowing costs, making the $40 trillion U.S. debt harder to
manage.
Loss of
"Safe Haven" Status: Historically, investors flocked to the dollar
during crises. Under Trump's current term, some analysts observe that investors
are instead seeking refuge in other assets as the U.S. government itself is
seen as a source of market turmoil.
BRICS
Threats: To protect the dollar's status as a reserve currency, Trump has
threatened 100% tariffs against BRICS nations if they attempt to move away from
the dollar.
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