The value of the US dollar dropped 10% over the past year and Trump thinks 'it's great.' But here's what it really means for your money

“I think it’s great. I mean the value of the dollar, look at the business we’re doing,” Trump told reporters in Iowa when asked about the dollar’s decline (1). He added that he could have the U.S. dollar “go up or go down like a yo-yo” but instead preferred to allow it to “seek its own level, which is the fair thing to do.”

It’s not the first time Trump has touted the advantages of a weak dollar for businesses like manufacturers and exporters. Last July, he told reporters (3) that “a weak dollar makes you a hell of a lot more money,” claiming, “when we have a strong dollar … 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.”

Many attribute the dollar’s drop-off over the last year to various factors, from Trump’s tariffs and increasingly unstable global policies (4) to his ongoing fight over the independence of the Federal Reserve (5). And some, like Pinnacle Investment Management chief investment strategist Anthony Doyle, warn that the president’s flippancy could send the wrong message to global investors.

“When the person who could jawbone to defend the currency sounds unconcerned, the perceived backstop under the dollar gets thinner,” Doyle said in a recent interview with Bloomberg (6).

“Markets are reopening the question of whether the US is asking investors to accept a lower standard of stability, and therefore demanding a higher price for bearing U.S. risk.”

What it means for Americans when the greenback goes into the red

The continued fall of the U.S. dollar comes after a 12-month period ending in December when consumer prices rose 2.7% (7). Food prices, in particular, outpaced that average, rising 3.1%.

A continually weakening dollar could further exacerbate the affordability crisis that’s already hitting American pocketbooks, cutting purchasing power and raising the cost of imported goods — a price jump often passed on to consumers (8) — that can spark higher inflation.

“For everyday Americans,” one analyst told Business Insider (9), "the buying power of your dollar goes down as the value of the dollar goes down against the basket of other currencies. So it does make it harder to keep up with [the] higher cost of goods."

American tourists abroad also see their spending power take a hit when the U.S. dollar falls, with one travel expert (10) suggesting “prices being anywhere from 8% to as high as 14% higher across the board, especially in Europe, due to the weakness of the U.S. dollar.”

And while a weak dollar would, in theory, attract more tourists to the U.S., boosting local economies, a World Travel & Tourism Council report (11) in 2025 projected that the U.S. was set to lose more than $12 billion in tourism revenue last year, and the only country among 184 they analyzed “forecast to see international visitor spending decline in 2025.” It's due to the government “putting up the ‘closed’ sign,” they said.

Trump, meanwhile, is correct in his assertion that a weaker dollar benefits American exporters and boosts sales abroad — which could, in turn, create more job opportunities in the manufacturing sector. That’s all a plus for the U.S. Still, some question if any opportunity to increase exports might be offset by the negative impacts of Trump’s global tariff war (12).

Others, like The Cato Institute, expressly disagree with the idea of celebrating a weakened U.S. dollar, calling it “another example of economic shortsightedness” that “ignores knock-on and secondary effects” (13).

The Washington think tank argues that, while the weakened dollar is good for multinational corporations (MNCs) exporting their wares internationally, the economic hurt it puts on Americans at home could undo any of those exporter gains.

“If consumers see their real wealth reduced from an erosion of the value of their dollars,” the institute said, “their demand for goods, including domestic products, will drop — hurting the very MNCs that the ‘weak dollar’ policy is supposed to help.”

How to insulate your finances from the falling dollar

As the dollar depreciates and potentially makes life more expensive for Americans, there are ways that you can try to mitigate the financial impact on your bottom line.

Choosing a budget strategy that works for you is always a good idea — and especially so when trying to stretch every dollar as far as possible. Setting a budget, sticking to it and fine tuning it on a regular basis to adjust for increasing costs, will go a long way to keeping you on track, financially. As well, playing the loyalty card could help you avoid price increases passed on from companies also feeling the pinch.

For those concerned about their investments, diversification, as always, is key to weathering a financial storm.