As a candidate, President Trump emphasized American strength. As president, he is calling for a weak U.S. dollar, a departure from past presidents’ economic policies.
Trump’s support for a weak dollar, however, is no surprise. A weaker dollar — meaning a dollar that is less expensive in terms of foreign currency — would help achieve some of his major goals for the economy, especially stimulating U.S. manufacturing and limiting imports.
If foreigners can buy U.S. dollars cheaply, products made in the United States become cheaper for them. As a result, there is more demand for U.S. exports — a shift that would help Trump achieve his ongoing promise to reduce the U.S. trade deficit.
A strong dollar generally indicates that investors around the world are optimistic about the prospects for the U.S. economy. In an interview with the Wall Street Journal, Trump took credit for the strengthening dollar.
“I think our dollar is getting too strong, and partially that’s my fault because people have confidence in me. But that’s hurting — that will hurt ultimately,” Trump said, before suggesting that the phrase “strong dollar” could be misleading.
“Look, there’s some very good things about a strong dollar, but usually speaking the best thing about it is that it sounds good,” Trump said. “It’s very, very hard to compete when you have a strong dollar and other countries are devaluing their currency.”
For more than two decades, U.S. officials have consistently argued for a strong dollar — a rare point of bipartisan consensus in economic policy. Even Trump’s treasury secretary, Steven Mnuchin, said this year that a strong dollar was “a good thing” in the long run, while acknowledging negative consequences for manufacturers.
A strong dollar also draws in more immigrants from around the world. When immigrants can send more valuable dollars home to their families, working in the United States becomes more financially attractive. Limiting immigration has been another important feature of Trump’s economic policy.