A weak dollar can help but also harm

A hidden force is quietly pushing up costs for everything from summer vacations to weekly grocery bills: a weaker U.S. dollar.

The dollar has fallen approximately 10% against other major currencies since President Donald Trump returned to the White House, a decline that may be contributing to Americans’ growing concerns about affordability.

“It’s kind of a hidden tax,” says economist Thomas Savidge of the conservative-leaning American Institute for Economic Research. “What your dollar is going to be able to buy is going to shrink.”

The U.S. Dollar Index, which measures the greenback against other major currencies, experienced its steepest six-month drop in more than 50 years during the first half of 2025. Though the decline has stabilized somewhat, the dollar index remains about 10% lower than at the start of Trump’s current term.

Currency strength has significant economic implications. A strong dollar makes imports cheaper and can help control inflation. Conversely, a weaker dollar tends to increase prices on foreign goods but can boost American exports by making U.S. products more affordable overseas.

While U.S. presidents have traditionally voiced support for a strong dollar, Trump has repeatedly suggested that a weaker currency benefits American industry by making exports more competitive. “You make a hell of a lot more money with a weaker dollar,” Trump stated last year, one of numerous public comments indicating his preference for a declining dollar.

This currency shift has created clear winners and losers in the business world. Major multinational corporations have celebrated the dollar’s decline during recent earnings calls, with executives from Philip Morris to Coca-Cola highlighting the “favorable currency impact” that has boosted their international revenues.

“In many cases, we’ve got a weaker dollar, which is not unhelpful,” noted Elie Maalouf, CEO of InterContinental Hotels, during a February earnings call as the company announced higher profits and revenues.

For these global corporations, a weaker dollar makes their products more affordable to foreign buyers, potentially spurring increased sales. However, the vast majority of U.S. businesses operate primarily within domestic borders and face different circumstances, particularly if they rely on imported goods or materials.

Travis Madeira, a fourth-generation lobsterman who founded the lobster-shipping business LobsterBoys with his brother, experiences this challenge firsthand. Unlike competitors who primarily export, about 80% of his sales are to American customers.

“The exporters are gonna have the advantage when the dollar weakens,” Madeira explains, noting he’s paying more to import bait and purchase Canadian lobsters. “These guys are gonna have a little bit of a lever on us.”

While many large companies employ currency hedging strategies to insulate themselves from fluctuations or can offset impacts through increased international sales, smaller businesses often bear the full brunt of currency volatility.

David Navazio, CEO of Pennsylvania-based Gentell, which manufactures bandages and other medical supplies, operates plants in Brazil, Paraguay, Canada, New Zealand, and the United Kingdom. In each location, the dollar’s decline has increased Gentell’s operational costs.

The company has been forced to raise some prices to reflect these currency shifts, which compound other challenges including tariffs and war-related spikes in fuel costs. “A year ago, none of these were concerns,” Navazio says. “And it always hurts the consumer.”

For American consumers, the reality of a declining dollar becomes most apparent during foreign travel or when making purchases directly from international sellers. Those traveling to Mexico, Americans’ top foreign destination, will find their dollar about 16% weaker versus the peso compared to early 2025. Similar declines of 10% to 17% have occurred against the Swiss franc, South African rand, Danish krone, Swedish krona, and the Euro.

The impact on imported goods is more nuanced but still significant. Economists estimate that in advanced economies like the U.S., roughly 5% to 10% of currency depreciation gets passed on to consumers through higher prices. While this percentage may seem small, it adds another layer of pressure when prices are already affected by supply chain issues and inflation.

Coffee provides a telling example. As one of the grocery items experiencing the largest price increases over the past year, coffee imports from Brazil—America’s largest supplier—have been affected by the dollar’s 13% decline against the Brazilian real. Currency fluctuations tend to have stronger effects in developing economies, and while only a portion of this change directly influences coffee’s retail price, these factors accumulate. According to government data, coffee prices have risen nearly 19% in the U.S. over the past year.

While the dollar’s recent decline is notable, currency values fluctuate constantly. The greenback has reached lower levels during previous administrations, dating back to the creation of the Dollar Index in 1973 under President Richard Nixon.

Kenneth Rogoff, a Harvard University economist and former chief economist at the International Monetary Fund, believes the dollar’s decline was inevitable regardless of who occupied the White House. “The dollar had been on a 15-year bull run,” he noted. “I would argue the dollar is still wildly overvalued, and over the next maybe five or six years, it might fall 15%.”

For American consumers, Rogoff predicts continued pressure on commodity prices, particularly with the Iran war’s impact on fuel costs. “They’re just going to go up,” he warns, “no matter what the dollar’s at.”