President Trump's dollar dilemma
Which is better for the U.S. economy, a strong dollar or a weak dollar?

The smartest insight and analysis, from all perspectives, rounded up from around the web:
Well, now we know what keeps President Trump awake at night, said Taylor Tepper at Money. According to The Huffington Post, the president recently placed a 3 a.m. phone call to his then–national security adviser Mike Flynn and asked whether a strong dollar or a weak dollar was better for the U.S. economy. "Flynn reportedly demurred," suggesting Trump call an economist instead. But it's a legitimate question, especially with the greenback hovering at a 14-year high. The simplest explanation is that a strong dollar makes foreign goods like German-made cars and shirts from China cheaper to buy for U.S. consumers. But a strong dollar hurts American manufacturers, whose exports become more expensive for overseas customers. "To answer the president's question, then, it all depends on who you are."
This debate has long consumed economists, said Chelsey Dulaney at The Wall Street Journal. The main benefit of a strong dollar is that it reflects confidence in the U.S. economy. "But if the dollar gets too strong, it can unleash a slew of negative consequences for both the U.S. and economies around the world." A surging greenback makes commodities like oil, which is priced in dollars, more expensive. Developing countries also hold more than $315 billion in dollar-denominated debt, which "becomes more expensive to pay back when the dollar rises." And because we live in a global economy, a foreign nation's debt woes can quickly cause economic pain in the U.S.
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
The president now has to make a choice, said Matthew Yglesias at Vox. Just last month he declared that the strong dollar is "killing us" by making U.S. manufacturers less competitive. And "the high price of the dollar over the past three years is a key reason why American manufacturing employment has flatlined." Any move by the Trump administration that reduces the dollar's value would likely provide a short-term boost to the manufacturing sector. But it would also cut the purchasing power of all Americans, most of whom don't work in factories or live in factory towns. So, that's the trade-off. "If you want to improve living standards for most Americans, a strong dollar is better. But if you want to deliver on your campaign promises to the Midwest, you probably want a weaker one."
Trump might want to devalue the dollar, but his policies could make the currency even stronger, said Neil Irwin at The New York Times. Fears that Trump will tear up the North American Free Trade Agreement have already caused the Canadian and Mexican currencies to drop in value against the dollar. The GOP's proposed border adjustment tax — which taxes imports but makes revenues from exports deductible — could further increase the dollar's value by as much 20 percent. And if the administration's plan to cut taxes while boosting infrastructure spending comes to fruition, the Federal Reserve would likely increase interest rates. Global investors seeking greater returns would then shift their assets to the U.S. If that happens, the dollar will keep on climbing, no matter what else the president does.
Sign up for Today's Best Articles in your inbox
A free daily email with the biggest news stories of the day – and the best features from TheWeek.com
-
Today's political cartoons - March 30, 2025
Cartoons Sunday's cartoons - strawberry fields forever, secret files, and more
By The Week US Published
-
5 hilariously sparse cartoons about further DOGE cuts
Cartoons Artists take on free audits, report cards, and more
By The Week US Published
-
Following the Tea Horse Road in China
The Week Recommends This network of roads and trails served as vital trading routes
By The Week UK Published
-
The JFK files: the truth at last?
In The Spotlight More than 64,000 previously classified documents relating the 1963 assassination of John F. Kennedy have been released by the Trump administration
By The Week Staff Published
-
'Seriously, not literally': how should the world take Donald Trump?
Today's big question White House rhetoric and reality look likely to become increasingly blurred
By Sorcha Bradley, The Week UK Published
-
Will Trump's 'madman' strategy pay off?
Today's Big Question Incoming US president likes to seem unpredictable but, this time round, world leaders could be wise to his playbook
By Sorcha Bradley, The Week UK Published
-
Democrats vs. Republicans: who are the billionaires backing?
The Explainer Younger tech titans join 'boys' club throwing money and support' behind President Trump, while older plutocrats quietly rebuke new administration
By Harriet Marsden, The Week UK Published
-
US election: where things stand with one week to go
The Explainer Harris' lead in the polls has been narrowing in Trump's favour, but her campaign remains 'cautiously optimistic'
By Harriet Marsden, The Week UK Published
-
Is Trump okay?
Today's Big Question Former president's mental fitness and alleged cognitive decline firmly back in the spotlight after 'bizarre' town hall event
By Harriet Marsden, The Week UK Published
-
The life and times of Kamala Harris
The Explainer The vice-president is narrowly leading the race to become the next US president. How did she get to where she is now?
By The Week UK Published
-
Will 'weirdly civil' VP debate move dial in US election?
Today's Big Question 'Diametrically opposed' candidates showed 'a lot of commonality' on some issues, but offered competing visions for America's future and democracy
By Harriet Marsden, The Week UK Published