A weaker U.S. dollar has emerged as a quiet but persistent driver of cost pressure for Americans, shaping prices for everything from overseas travel to imported consumer goods since Donald Trump returned to the White House. The dollar has fallen about 10% against other major currencies over that stretch, a movement that economists and business leaders say can feed into affordability concerns even when it does not show up as a headline economic statistic.
Thomas Savidge, an economist at the conservative-leaning American Institute for Economic Research, described the mechanism as largely indirect: “It’s kind of a hidden tax,” Savidge said, arguing that “What your dollar is going to be able to buy is going to shrink.” In practice, the impact depends on how much of a person’s or a company’s spending ties to foreign goods and services and how quickly currency changes flow through contracts, pricing decisions and supply chains.
The scale of the currency shift has been most visible in the trade-weighted strength of the dollar. The U.S. Dollar Index, which measures the greenback against other major currencies, logged its steepest six-month drop in more than 50 years in the first half of 2025, and—though the decline has not deepened further—remains about 10% lower than at the start of Trump’s term. Using a FRED series for a broad trade-weighted dollar measure, the value of the Trade-Weighted U.S. Dollar Index (Broad), DTWEXBGS, stood at 118.7294 as of May 3.
A stronger dollar generally makes imports cheaper and can help keep inflation in check. A weaker dollar, by contrast, can increase prices on foreign goods while boosting exports. Presidents have often supported a strong dollar rhetorically while pursuing policies that, at times, pushed the currency lower, and Trump has been more direct in public messaging about the advantages he associates with a weaker currency.
Trump suggested last year that a weaker dollar can benefit American industry, including by saying: “You make a hell of a lot more money with a weaker dollar.” That statement aligned with a broader pattern that also shows up in corporate disclosures. In recent months, earnings-call commentary has included discussion of currency tailwinds, with executives citing effects described as “favorable currency impact” when the currency decline improved results tied to operations outside the U.S.
For the biggest multinational companies, a weaker dollar can translate into sales and earnings that look stronger when foreign revenue is converted back into dollars. Elie Maalouf, the CEO of InterContinental Hotels, said on a February call as the company announced higher profits and revenues that “In many cases, we’ve got a weaker dollar, which is not unhelpful.” But the benefits are uneven across the economy, and even companies with international operations often manage the exposure differently through hedging and contract terms.
For smaller businesses, currency weakness can be harder to offset. Travis Madeira, a fourth-generation lobsterman who founded the lobster-shipping business LobsterBoys, said about 80% of his sales go to Americans while his company still imports lobster inputs. Madeira said the exporters “are gonna have the advantage when it comes to the dollar weakening,” adding that “These guys are gonna have a little bit of a lever on us,” while he described paying more to import bait and buy Canadian lobsters.
David Navazio, the CEO of Pennsylvania-based Gentell, described currency declines increasing costs across multiple production locations. Gentell operates plants in Brazil, Paraguay, Canada, New Zealand and the United Kingdom, and Navazio said in each location the dollar has fallen, increasing costs. Gentell has raised some prices to reflect currency fluctuations, which Navazio said can stack on top of other pressures such as tariffs and war-related spikes to fuel costs; he also said: “A year ago, none of these were concerns,” and that it “always hurts the consumer.”
For consumers, the immediate effect of exchange rates can show up in foreign travel and in purchases made directly from international sellers. Cross the border into Mexico, and the dollar is about 16% weaker versus the peso compared with early 2025, according to the report, while declines of about 10% to 17% have been recorded against other currencies including the Swiss franc, South African rand, Danish krone, Swedish krona and the euro. The report also notes that economists estimate that only about 5% to 10% of a currency decline is typically passed through to consumers in advanced economies such as the U.S., meaning the currency move may be only part of a larger pricing picture.
Still, currency weakness can add pressure when other cost drivers are already at work. Coffee illustrates the layering effect described in the report: Brazil is the biggest source of coffee for the U.S., and the dollar has fallen around 13% versus its real, a shift that can hit hardest in producer countries. While the report says only a fraction of the currency change may feed into retail coffee prices, it adds that coffee prices are up nearly 19% in the U.S. in the past year, citing government data.
Analysts also warn that additional movement may be in the pipeline. Kenneth Rogoff, a Harvard University economist and former chief economist at the International Monetary Fund, said in the report that “a lot of policies that Trump is doing are something of a cancer for the dollar,” and argued the decline would likely continue regardless of who holds power. Rogoff said “The dollar had been on a 15-year bull run” and added: “I would argue the dollar is still wildly overvalued,” predicting it might fall 15% over the next five or six years. He also said commodity prices are likely to rise, particularly with the impact of the Iran war on fuel prices.