This administrations goals to achieve a 'more balanced' budget includes US dollar valuation changes.
Trump administration aims to "reengineer the dollar to be depreciated" to boost U.S. exports and manufacturing (Stanford GSB, Insights). Former economic advisor Judy Shelton noted, "If the dollar's strong, it makes it very difficult for our exports to compete in foreign markets" (Fox Business).
"the dollar must depreciate to allow for U.S. reindustrialization" (El Pais, April 7, 2025) and that President Trump "wants to ensure that the US dollar can trade at a weaker value compared with other currencies while not undermining the centrality of the currency" (Al
The President does understand that Americans will pay materially more for imported good, as indicated in this statement its not just a small cost increase to US citizens. After all, 2 vs 30 is being able to afford 90% less than today.
"Well, maybe the children will have two dolls instead of 30 dolls, you know. And maybe the two dolls will cost a couple of bucks more than they would normally." YouTube
What we are aiming for America to not have a financial privilege of being world reserve currency. Being the reserve currency everyone else 'games' the system to their advantage putting America at a net disadvantage when it comes to debt. The word privilege indicates we get goods cheaper due to this position at the cost of a future currency debt. No one knows in 10 years if the debt will matter or not as we advance society and tools like AI, but we are assuming it is an issue and forcing dealing with it now.
If America succeeds at devaluing the dollar, and dethroning itself as the world reserve currency, be careful what you wish for, as its a one-way trip. This is why everyone should consider diversifying some assets outside of USA.
A great video explaining some of the potential challenges. This concern drives my thinking of international investment as part of a diversification strategy.
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