Commentary by Stephen Macaulay

While “tariffs” might be his favorite word, “weak dollar” might be close in the level of affection that Donald Trump has for it.

Consider these quotes:

• “You make a hell of a lot more money with a weaker dollar. When you have a strong dollar, you can’t sell anything. It’s only good for inflation, and it’s good psychologically. It makes you feel good.”
• "So when we have a strong dollar, one thing happens: It sounds good. But you don't do any tourism. You can't sell tractors, you can't sell trucks, you can't sell anything,"
• "It is good for inflation, that's about it."

His typical exaggeration notwithstanding, the Trump administration has done its damnedest to weaken the dollar.

According to the Federal Reserve Bank of St. Louis (FRED) earlier this month:

“Recent exchange rates with stable currencies (e.g., the euro, yen, and Swiss franc) suggest a general weakening in the US dollar, which is consistent with the current federal administration’s stated preferences.”

FRED calculated that if compared to the dollar exchange rate against the Euro area was 100 in January 2025, it was down to 89 in October, an 11% decrease.

One of the ways the administration has weakened the dollar is by its agitated approach to the global economy. There has been Trump’s consistent “they’re ripping us off” refrain, which evinces a lack of understanding of global supply chains. 

There are the on-again-off-again tariffs and the announcement of “deals” without any specificity. 

There are the attacks by Trump on Fed chairman Jerome Powell — “I’ll be honest, I’d like to fire his ass;” “He’s an average mentally person. . .Low IQ for what he does. I think he’s a very stupid person, actually,” which makes one wonder about Trump’s IQ, given that he was the man who nominated Powell to the Fed.

There are the tariffs on imported goods, which function as a tax paid by consumers, which can increase inflation, which reduces the purchasing power of the dollar.

There is simply a whole lot of uncertainty, and corporations and central banks don’t like that.

The dollar has long been the global reserve currency. It has been that because it was considered to be stable, so not only did it facilitate global trade (something that the Trump Administration’s policies are hobbling, to put it mildly), but it provided confidence in the markets.

Uncertainty ≠ Confidence

Trump wants the dollar to remain as the global reserve currency, yet his administration’s actions are doing things that put it in jeopardy. Although some people in the US are skeptical that the Chinese renminbi could replace the dollar, some people were skeptical of the Chinese auto industry versus the US. Yet Ford CEO Jim Farley recently said: “They have enough capacity in China with the existing factories to serve the entire North American market, put us all out of business.”

Yes, the dollar can be replaced.

If we go back to Trump’s quotes about the consequences of a strong dollar, there’s the comment about tourism. He’s saying, in effect, that a weak dollar means that foreign tourist’s currency will buy them more in the US market, so conceivably they’ll be flocking to the US.

According to a recent report from the US Travel Association:

“Travel to the United States is projected to reverse course and fall to just 85% of 2019 levels in 2025.”

Canadians have generally been about 25% of all international tourists to the US. And people from Canada, which have generally represented about a quarter of all tourists to the US, are not taking as many trips: in September land crossings were down about 35% and air travel down 27%.

Canadian tourists spent $20.5 billion in the US in 2024. 

They’re simply not coming in the numbers they had been before the Trump Administration destroyed relations with our former best neighbor. If we average the September reduction in Canadian tourists (31%) and then subtract that from the $20.5 billion, this means that the Canadian spend would be $14.1 billion. How helpful is that to the US economy?

For a man who is a vaunted businessman (despite that the Trump Organization has filed for Chapter 11 six times — and while everyone knows that casinos effectively print money, most of those reorgs were based on casinos) and dealmaker, his understanding of things like the importance of the U.S. dollar is dubious at most.

Macaulay is pundit-at-large for The Hustings. Most of his columns appear on the right; This one is on the left to provide balance with Rich Corbett on the debate over the weakening US dollar.